Climate for Business in Latin America Best in three Years: Report
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The climate for doing business in Latin America is the best it has been in more than three years, according to a report released by a leading Brazilian economic institute.
According to newly released analysis from the Getulio Vargas Foundation (FGV), among ten major countries from Latin America, the overall business climate in the Q3 of 2021 is the best it has been since Q1 of 2018.
That suggests the environment for doing business in Latin America is currently stronger than it was long before the global pandemic struck.
FGV’s analysis looks at factors such as the supply of inputs and raw materials for business, as well as commodity prices. Results are based on a measure referred to as ‘Economic Climate Indicator (ICE), which is calculated based on an average between present business conditions and predicted conditions, known as ‘Current Situation Indicators’ (ISA) and ‘Expectations Indicators’ (IE).
The countries analysed included Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, and Uruguay. Between Q2 and Q3 of 2021, all of the countries surveyed registered an improvement in ICE, which is based on a 100-point “neutrality scale”.
Overall, the region has registered five consecutive quarters of improvement on that scale, to hit an average score of 99.7 this quarter. That is the highest score since the regional average reached 101.5 in 2018.
Among them, Paraguay was the standout performer, registering an ICE score of 125.1 — a significant rise on the score of 100.0 it registered in the previous quarter which consolidates its status as having the best climate for business in Latin America, according to FGV.
Other strong performers for Q3 included Brazil (116.5 points), Chile (104.1), Peru (102), and Colombia (101.1).
Brazil’s 34.3 point rise compared to Q2 saw it move up two places into the second position among those countries surveyed, while Peru’s 21.1 rises saw it move into the fourth position, having occupied sixth last quarter.
Elsewhere, Ecuador registered the second greatest improvement since last quarter among all of the countries analysed, gaining 26.2 points to reach 77.9. That suggests the country’s recently elected pro-business President Guillermo Lasso has overseen a significant improvement in the business climate in the country.
Improving business climate good news for investors
The encouraging results of this latest analysis from FGV point to a bright future for investment and business in Latin America, as economies throughout the region continue to reactivate following the turmoil of the global pandemic.
With all of the countries surveyed registering improvements on the previous quarter, and the overall climate for business in Latin America now the best it has been since Q1 of 2018, the signs for investors are highly encouraging.
Notably, prior to Q4 of 2017, the last time the region registered a score higher than the current quarter was Q3 in 2013. While, five consecutive quarters without any decline is the most sustained improvement seen in the climate for business in Latin America recorded, with analysis going back to Q3 of 2011.
With many economies in Latin America expected to grow and bounce back from the ructions of the pandemic in the latter part of 2021, and others in early 2022, the future prospects for doing business in the region appear to be very strong.
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