Political Risk Latin America Blog @PolRiskLatam

Colombia-Brazil: where’s the trade, hombre?

Posted in News and Articles, Political Risk by politicalrisklatam on August 4, 2011

by Naomi Mapstone for Financial Times – Beyond Brics, August 4th, 2011

For all the talk of south-south investment flows, some of Latin America’s strongest economies are finding it easier to access Chinese, American or European consumers than Brazilians.

Colombia, which shares a 1,950km Amazon border with Brazil, is a case in point.

Bilateral trade between the two nations has quadrupled since 2004, off a low base, largely thanks to Brazilian exports.

According to a new study by the Inter-American Development Bank, out on Thursday:

Despite all the dynamism of the last decade, bilateral trade in 2010 accounted for only 0.7% of the total trade of both countries, well below the already modest 20% share intraregional trade in Latin America.

The study’s lead author, Mauricio Mesquita, told beyondbrics the slow progress was due in large part to Brazil’s reluctance to lower tariffs. This year, as part of a 15-year tariff reduction deal, the average preferential tariff on Colombian exports to Brazil was 5.8 per cent, while Brazil’s was 2.4 per cent. Other factors – including a significant infrastructure deficit in the Amazon region and high logistics costs – have also contributed to the low level of trade between the two countries.

Stiff competition from Chinese manufacturers should also strengthen the case for boosting internal markets, the report notes. (continue reading… )


It’s the economy…right?

Posted in News and Articles, Political Risk by politicalrisklatam on April 12, 2011

by The Economist – Americas View, April 5th, 2011.

A lot of foreign news coverage of Mexico gives the impression that crime is the only issue under discussion in the country. It isn’t. With a presidential election due in July next year, the main opposition party is making clear that it is going to fight the election focusing on poverty and the economy, not on the war against organised crime.

At a recent press conference Humberto Moreira, the new head of the Institutional Revolutionary Party (PRI), repeatedly attacked the record of Felipe Calderón, the president, in tackling poverty. Between 2006 and 2009, he said, 10.1m Mexicans fell below the poverty line—“enough to fill  Azteca Stadium 92 times.” Judging by Mr Moreira’s comments, it looks as if soundbites on poverty are going to be more common in the next 15 months than ones about the 35,000 who have died during Mr Calderón’s assault on the drug runners.

Is it a good idea to base the campaign on the economy rather than security? There is plenty to criticise in both. Mexico’s economy recently suffered the steepest recession in the Americas, shrinking 9.7% in the year to June 2009. The figures from the battle lines are not much better: last year the number of homicides linked to organised crime was more than five times higher than it was in 2007. (continue reading… )


President Calderón Converses with Foreign Entrepreneurs and Investors in Mexico

Posted in News and Articles, Political Risk by politicalrisklatam on February 18, 2011

Press Release, February 16th,2011.

Mexican President Felipe Calderón received the 58 directors of firms with the highest foreign investment in Mexico in order to exchange points of view on various issues on the national agenda, mainly related to economic issues and security.

President Calderón stated that the decision by these firms to invest in Mexico reflects the strength and perspectives of its economy. He also detailed several elements of the agenda on which Federal Government is working to make Mexico a more competitive and safe country.

Economy secretary Bruno Ferrari García de Alba explained the advantages that the country offers productive investment, and the actions being carried out to improve the business environment. Among other indicators, he said that Mexico rose from 12th to 6th position as the most attractive destination for investment, according to the United Conference on Trade and Development (UNCTAD), World Investment Prospects 2009-2011. He added that between 2007 and 2010, according to AT Kearney’s Foreign Direct Investment Confidence Index 2010, Mexico rose from 19th to 8th position. These examples confirm Mexico as a solid investment destination, with an enormous potential for growth for conducting business.

Representatives of Federal Government’s Security Cabinet explained the record progress registered within the National Security Strategy, particularly as regards capturing criminal leaders, institutional reinforcements and reforms of the legal framework. At the same time, they stated that the authorities in the three orders of government and society as a whole must maintain a common front to achieve genuine, sustainable security. (continue reading… )


Default Risk Sinks on Paris Club, CPI Reform: Argentina Credit

Posted in News and Articles, Political Risk by politicalrisklatam on November 25, 2010

by Drew Benson for Bloomberg Business Week, November 25th, 2010.

Argentine bond risk is falling the most in the world this week after President Cristina Fernandez de Kirchner pledged to open talks with the Paris Club on $6.7 billion in defaulted debt and redesign the consumer price index.

The cost of protecting Argentine government debt against non-payment for five years with credit-default swaps tumbled 51 basis points, or 0.51 percentage point, in the five days through yesterday to 659, according to CMA data. The next-best performer among countries was Iceland, whose default risk sank 6.7 basis points.

Fernandez said Nov. 16 the Paris Club group of creditor nations accepted Argentina’s request to start talks to restructure the debt without International Monetary Fund oversight. The government also asked the IMF this week to help revamp the national consumer price index amid concern the data doesn’t reflect the true inflation rate.

“These are all very good steps and very clear signals about the direction in which they seem to be moving,” said Gunter Heiland, an emerging market debt portfolio manager who helps oversee more than $2.6 billion worth of assets, including an “overweight” Argentine position, at Greenwich, Connecticut- based fund Gramercy. “We find it very encouraging.” (continue reading… )