The Business Climate In Latin America Rises To Its Best Level In Two Years

The business climate in Latin America rose in this third quarter of 2023 to its best level in the last two years and to the second best in almost six years, according to the indicator released this Thursday by the Brazilian center for economic studies Getúlio Vargas Foundation (FGV).

The so-called economic climate index (ICE) of Latin America, which the FGV prepared with surveys of 119 specialists from 15 countries, jumped more than thirty units, from 65.8 points in the second quarter to 99.6 points in the third.

This is his best level since the second quarter of 2021 (101.4 points) and the second best since the first quarter of 2018 (102 points). According to FGV, the strong jump was caused by the improvement in the evaluation for Brazil and Mexico, the two largest economies in the region. While Brazil's index jumped from 58.8 points in the second quarter to 121.4 points in the third -the highest for the country in eleven years-, Mexico's rose from 85.7 to 118.7 points.

"The trajectory of the fall in the inflation rate and the approval of the new fiscal framework and the tax reform, as well as the upward revisions of the projections for this year's GDP, are some of the factors that explain the better evaluation of Brazil", according to the FGV.

The entity attributed the rise in Mexico's rating to the fall in inflation, the appreciation of its currency against the dollar and the displacement of direct investment flows from the United States and China to Mexico.

All the countries analyzed registered an improvement in their business climate, with the exception of Uruguay, which registered a slight drop from 119.4 points to 114.9 points. Paraguay continues to be the country with the best index in the region, with 172.7 points, followed by Brazil (121.4), Mexico (118.7) and Uruguay (114.9). Peru (85.8 points), Chile (76.6), Colombia (61.4), Ecuador (49.9), Bolivia (47.7) and Argentina (30.3) followed.

According to the study, the improvement in the indicators reflected the upward revision of the projections for the growth of the GDP of the countries of the region, except for Peru, Uruguay, Chile and Argentina. The forecast for economic growth in 2023 for Latin America in general was raised from 1.1% in the second quarter to 1.7% in this third.

The country that will grow the most this year, according to the new projections, is Paraguay, with an expansion of 4.6%, followed by Bolivia (3.0%), Mexico (2.3%), Ecuador (2.2%) , Brazil (2.2%), Peru (1.9%), Colombia (1.5%) and Uruguay (1.3%). The forecast for Chile is for a retraction of 0.5% and for Argentina a decline of 1.3%.