Economia global

Global Economic Research

Pablo F.G. Bréard Vice-President & Head of International Research

SAHIC 2011 Santiago, Chile - September 2011

Global Shocks & Economic Outlook

Latin America in Context


“The global economy is in a dangerous new phase. Global activity has weakened and

become more uneven, confidence has fallen sharply recently, and downside risks are

growing”

World Economic Outlook Report, September 20, 2011

Global Economic Outlook ► The IMF View


• Global Economic Rebalancing / Softness

• Europe/US/Japan Debt (Un)Sustainability

• Fiscal Consolidation & (De)Leveraging

• Erratic Governance / Intervention INXS

• Financial Market Volatility / Contagion

• (Dis)Orderly Currency Adjustments

• Credit Risk (Re)pricing / Ratings Shifts

The Shifting Global Landscape


Global Economic Rebalancing



2.9%

19.3%

2.3%2.8% 2.8% 3%

3.9%

5.6% 5.8%

14.6%

1,500

3,000

4,500

6,000

7,500

9,000

10,500

12,000

13,500

15,000

Italy

Fra

nce

UK

Bra

zil

Ru

ssia

Germ

an

y

Jap

an

Ind

ia

Ch

ina

US

A

Source: IMF World Economic Outlook (April 2011)

GD

P s

ize (

US

$ b

illi

on

) in

PP

P t

erm

s 2

011-1

2 (

e)

Americas

Europe

Asia

Global Economic Rebalancing ► The New G10


Global Growth > Emerging Market Strength

0.9 0.91.4 1.5

1.92.2

2.6

3.8

4.7

8.4

9.4

0

2

4

6

8

10

Italy

Sp

ain

UK

Fra

nce

Jap

an

US

A

Germ

an

y

Bra

zil

Ru

ssia

Ind

ia

Ch

ina

Real G

DP

% C

han

ge (

2011-1

2e)

Developed

Developing(BRIC)

Global Inflation > Emerging Markets under Pressure

1.1

2.0 2.2 2.4 2.4

3.3

4.8

6.0

6.8

8.0

0

2

4

6

8

Ja

pa

n

Fra

nc

e

Ge

rma

ny

US

A

Ita

ly

UK

Ch

ina

Bra

zil

Ind

ia

Ru

ss

ia

Co

nsu

mer

Pri

ce I

nfl

ati

on

% C

han

ge (

2011-1

2e)

Developed

Developing(BRIC)

Fiscal Outlook > Deep Adjustments under Way

(9.2) (9.2)

(7.8)

(5.9)(5.5)

(3.9)

(1.9)

(7.7)

(2.5)

(1.6)(1.3)

(10)

(8)

(6)

(4)

(2)

0

Jap

an

US

A

UK

Ind

ia

Sp

ain

Fra

nce

Italy

Bra

zil

Germ

an

y

Ru

ssia

Ch

inaG

en

era

l G

ov

ern

me

nt

Bo

rro

win

g N

ee

ds

% G

DP

(2

01

1-1

2e

)

Developed

Developing(BRIC)

Debt Sustainability > Credit Risk Repricing

6680 85 89

101

120

231

917

65 68

0

20

40

60

80

100

120

140

160

180

200

220

240

Ru

ss

ia

Ch

ina

Bra

zil

Sp

ain

Ind

ia

Ge

rma

ny

UK

Fra

nc

e

US

A

Ita

ly

Ja

pa

n

Pu

bli

c S

ecto

r G

ross D

eb

t %

GD

P (

2011-1

2e)

Developed

Developing(BRIC)

Neo G10 ► Growth, Inflation & Debt Dynamics


138 143118

102

154

201171

500

508357

371 423 435

-100

0

100

200

300

400

500

600

700

800

900

1000

1100

1200

1300

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011f

2012f

Source: Institute of International Finance - June 2011

US

$ b

illi

on

Foreign Direct InvestmentPortfolio InvestmentMultilateralsBank LendingBond Issuance

Foreign Capital Flows ► Emerging Markets in Fashion


Global Equity 5Y % Return USD % Return since March 2009

120

68

104

135

71

109

67

0 20 40 60 80 100 120

Developing

Europe

Developing

Americas

BRIC

Developing Asia

European Union

North America

WORLD

USD-adjusted Total Return (%)

Europe

Asia

Americas

-50%

-45%

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Se

p-0

6

De

c-0

6

Ma

r-0

7

Ju

n-0

7

Se

p-0

7

De

c-0

7

Ma

r-0

8

Ju

n-0

8

Se

p-0

8

De

c-0

8

Ma

r-0

9

Ju

n-0

9

Se

p-0

9

De

c-0

9

Ma

r-1

0

Ju

n-1

0

Se

p-1

0

De

c-1

0

Ma

r-1

1

Ju

n-1

1

Global Stocks ► Emerging Market OutPerformance


Country Index Return (5-yr) % L/C Return since March 2009

55%

71%

80%

107%

168%

186%

195%

0% 40% 80% 120% 160% 200%

Brazil BOVESPA

Chile IPSA

Colombia IGBC

Mexico IPC

Venezuela IBVC

Argentina MERVAL

Peru IGBVL

-50%

-25%

0%

25%

50%

75%

100%

125%

Se

p-0

6

Ja

n-0

7

Ma

y-0

7

Se

p-0

7

Ja

n-0

8

Ma

y-0

8

Se

p-0

8

Ja

n-0

9

Ma

y-0

9

Se

p-0

9

Ja

n-1

0

Ma

y-1

0

Se

p-1

0

Ja

n-1

1

Ma

y-1

1

Peru IGBVLMexico IPCColombia IGBCChile IPSABrazil BOVESPA

LATAM Equities ► Favourable Trend / Correction?


Global Recovery Dynamics



Economic Zone 1999-08 2009 2010e 2011f 2012f

North America 2.6 (2.9) 3.2 1.9 2.2

2.4 (2.6) 3.0 1.7 2.1

Euro Zone 1.9 (4.2) 1.7 1.6 1.2

Japan 1.4 (5.2) 4.0 0.3 3.0

Developing Asia 7.7 5.6 9.4 7.8 8.0

10.1 9.1 10.4 9.3 9.5

Developing Europe 5.3 (5.2) 4.6 4.5 3.9

Latin America (ex Mex) 3.3 (0.1) 6.2 4.0 4.1

3.1 (0.2) 7.5 3.6 4.0

Global Growth ► Gradual, Soft & Uneven Recovery


1.92.2

3.6 3.63.8

4.6

5.0

5.65.9

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

US

A

Can

ad

a

Mexic

o

Ven

ezu

ela

Bra

zil

Co

lom

bia

Arg

en

tin

a

Ch

ile

Peru

Rea

l G

DP

(a

nn

ua

l %

gro

wth

ra

te) 10-year average

2011 - 12 (e)

Americas ► North-South Growth Divergence


1.82.2

1.7

-3

-2.5

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2

2.5

3

3.5

4

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Q1 1

1

Q2 1

1

Q3 1

1

Q4 1

1

Q1 1

2

Q2 1

2

Q3 1

2

Q4 1

2

Real

GD

P %

ch

an

ge (

%)

-3

-2.5

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2

2.5

3

3.5

4

Year/Year

Year/Year (annualized)

Quarter/Quarter (annualized)

US Growth View ► Modest & Uneven Recovery


0

0.25

0.5

0.75

1

1.25S

ep

-10

Oct-

10

No

v-1

0

Dec-1

0

Jan

-11

Feb

-11

Mar-

11

Ap

r-11

May-1

1

Ju

n-1

1

Ju

l-11

Au

g-1

1

Fed FundsFut Mar 2012Fut Jun 2012

0.25

0.5

0.75

1

1.25

1.5

1.75

2

2.25

2.5

Sep

-10

Oct-

10

No

v-1

0

Dec-1

0

Jan

-11

Feb

-11

Mar-

11

Ap

r-11

May-1

1

Ju

n-1

1

Ju

l-11

Au

g-1

1

UK repo rateFut Mar 2012Fut Jun 2012

0.5

0.75

1

1.25

1.5

1.75

2

2.25

2.5

Sep

-10

Oct-

10

No

v-1

0

Dec-1

0

Jan

-11

Feb

-11

Mar-

11

Ap

r-11

May-1

1

Ju

n-1

1

Ju

l-11

Au

g-1

1

Canada O/NFut Mar 2012Fut Jun 2012

0.5

0.75

1

1.25

1.5

1.75

2

2.25

2.5

Sep

-10

Oct-

10

No

v-1

0

Dec-1

0

Jan

-11

Feb

-11

Mar-

11

Ap

r-11

May-1

1

Ju

n-1

1

Ju

l-11

Au

g-1

1

EuriborFut Mar 2012Fut Jun 2012

Global Monetary Outlook ► Ongoing Monetary Stimulus


2.3 2.43.7 3.1 3.3 3.5

6.0

20.0

27.0

0

5

10

15

20

25

30

Can

ad

a

US

A

Mexic

o

Co

lom

bia

Peru

Ch

ile

Bra

zil

Arg

en

tin

a

Ven

ezu

ela

Co

ns

um

er

Pri

ce

In

fla

tio

n (

y/y

ra

te %

)

10-year average

2011 - 12 (e)

Americas ► Regional Inflation Convergence ?


12.00

5.25

4.25

0

2

4

6

8

10

12

14

Se

p-0

7

De

c-0

7

Ma

r-0

8

Ju

n-0

8

Se

p-0

8

De

c-0

8

Ma

r-0

9

Ju

n-0

9

Se

p-0

9

De

c-0

9

Ma

r-1

0

Ju

n-1

0

Se

p-1

0

De

c-1

0

Ma

r-1

1

Ju

n-1

1

An

nu

al

% C

han

ge

USBrazilMexicoChilePeruColombia

LATAM Interest Rates ► Gradual Easing in Sight?


Global Currency Adjustments




7.3

24

32

0 5 10 15 20 25 30 35

CHF

AUD

JPY

EUR

GBP

CAD

CNY

BRL

RUB

Americas

Asia/Oceania

Europe/Africa

EUR vs. USD (2005-2010)

1.20

1.59

1.37

1.19

1.23

1.27

1.31

1.36

1.40

1.44

1.48

1.52

1.56

1.60

Se

p-0

6

De

c-0

6

Ma

r-0

7

Ju

n-0

7

Se

p-0

7

De

c-0

7

Ma

r-0

8

Ju

n-0

8

Se

p-0

8

De

c-0

8

Ma

r-0

9

Ju

n-0

9

Se

p-0

9

De

c-0

9

Ma

r-1

0

Ju

n-1

0

Se

p-1

0

De

c-1

0

Ma

r-1

1

Ju

n-1

1

USD % loss since 06 Jun 2010

Global FX Volatility ► USD weakness in Focus


China

Europe

Mexico

Japan

Canada

-600

-500

-400

-300

-200

-100

0

Au

g-0

2D

ec-0

2A

pr-

03

Au

g-0

3D

ec-0

3A

pr-

04

Au

g-0

4D

ec-0

4A

pr-

05

Au

g-0

5D

ec-0

5A

pr-

06

Au

g-0

6D

ec-0

6A

pr-

07

Au

g-0

7D

ec-0

7A

pr-

08

Au

g-0

8D

ec-0

8A

pr-

09

Au

g-0

9D

ec-0

9A

pr-

10

Au

g-1

0D

ec-1

0A

pr-

11

Bil

ate

ral

Defi

cit

by M

ajo

r P

art

ner

US

$ b

illi

on

US Trade (im)Balance ► China Connection


FX Outlook 2011-12 ► LATAM in Global Context

2010 2011 2012

EUR/USD 1.34 1.45 1.40

USD/JPY 81 80 85

USD/GBP 1.56 1.63 1.70

USD/CAD 1.00 0.96 0.94

USD/CNY 6.61 6.25 5.88

USD/MXN 12.3 12.3 12.5

USD/CLP 468 485 495

USD/PEN 2.81 2.76 2.70

USD/COP 1,908 1,850 1,900

USD/BRL 1.66 1.70 1.75


0

100

200

300

400

500

600

700

Sep

-06

Dec-0

6

Mar-

07

Ju

n-0

7

Sep

-07

Dec-0

7

Mar-

08

Ju

n-0

8

Sep

-08

Dec-0

8

Mar-

09

Ju

n-0

9

Sep

-09

Dec-0

9

Mar-

10

Ju

n-1

0

Sep

-10

Dec-1

0

Mar-

11

Ju

n-1

1

US

$ b

illi

on

ColombiaPeruChileArgentinaVenezuelaMexicoBrazil

FX Reserves ► Fast & Steady Accumulation

Brazil accounts for over 50% of the region’s FX Reserves


FX % change vs USD (5-yr) FX % change (1-20 Sep 2011)

-11.3%

-6.5%

-5.9%

-4.5%

-0.5%

-12% -10% -8% -6% -4% -2% 0%

Brazilian

Real (BRL)

Mexican

Peso (MXN)

Chilean

Peso (CLP)

Colombian

Peso (COP)

Peruvian

Sol (PEN)

-15%

23%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

Se

p-0

6

Ma

r-0

7

Se

p-0

7

Ma

r-0

8

Se

p-0

8

Ma

r-0

9

Se

p-0

9

Ma

r-1

0

Se

p-1

0

Ma

r-1

1

MXNBRLPENCLPCOP

LATAM Currency Market ► Appreciating Bias?



Global Risk Repricing




“The Federal Reserve’s Acquisition of long-term Treasury securities boosted the prices of

such securities and caused long-term Treasury yields to be lower than they would

have been otherwise”

Ben Bernanke, July 13, 2011

US (Treasury Debt vs Mortgage) Market Rates (10-year History)

1.92

4.09

1.91

2.24

2.57

2.89

3.22

3.55

3.88

4.21

4.53

4.86

5.19

Se

p-0

1D

ec

-01

Ma

r-02

Ju

n-0

2S

ep

-02

De

c-0

2M

ar-

03

Ju

n-0

3S

ep

-03

De

c-0

3M

ar-

04

Ju

n-0

4S

ep

-04

De

c-0

4M

ar-

05

Ju

n-0

5S

ep

-05

De

c-0

5M

ar-

06

Ju

n-0

6S

ep

-06

De

c-0

6M

ar-

07

Ju

n-0

7S

ep

-07

De

c-0

7M

ar-

08

Ju

n-0

8S

ep

-08

De

c-0

8M

ar-

09

Ju

n-0

9S

ep

-09

De

c-0

9M

ar-

10

Ju

n-1

0S

ep

-10

De

c-1

0M

ar-

11

Ju

n-1

1

4.08

4.38

4.68

4.98

5.28

5.58

5.88

6.18

6.48

6.78

7.08

UST (10-year yield)

Mortgage (30-year rate)


Europe PIIGS CDS

3536

0200400600800

1,0001,2001,4001,6001,8002,0002,2002,4002,6002,8003,0003,2003,400

Se

p-0

8N

ov

-08

Ja

n-0

9M

ar-

09

Ma

y-0

9J

ul-

09

Se

p-0

9N

ov

-09

Ja

n-1

0M

ar-

10

Ma

y-1

0J

ul-

10

Se

p-1

0N

ov

-10

Ja

n-1

1M

ar-

11

Ma

y-1

1J

ul-

11

Se

p-1

1

GreecePortugal

IrelandSpainItaly

European Fiscal/Debt Shock ► Market Metrics

Europe PIGS Bond Yields

23

5.4

0

2

4

6

8

10

12

14

16

18

20

22

24

Se

p-0

6D

ec

-06

Ma

r-0

7J

un

-07

Se

p-0

7D

ec

-07

Ma

r-0

8J

un

-08

Se

p-0

8D

ec

-08

Ma

r-0

9J

un

-09

Se

p-0

9D

ec

-09

Ma

r-1

0J

un

-10

Se

p-1

0D

ec

-10

Ma

r-1

1J

un

-11

Germany Spain

PortugalIrelandGreece


0

50

0

1,0

00

1,5

00

2,0

00

2,5

00

3,0

00

3,5

00

Chile

Mexico

Colombia

Brazil

Peru

Argentina

Venezuela

Spain

Italy

Ireland

Portugal

Greece

Basis Points

PIIGS

LATAM

Credit Default Risk Metrics

European Debt Crisis ► Latin America in Context

Central Government Debt

Ch

ile

Peru

Co

lom

bia

Ven

ezu

ela

Mexic

o

Arg

en

tin

a

Bra

zil

Sp

ain

Po

rtu

gal

Irela

nd

Italy

Gre

ece

% O

f G

DP

(2

011-1

2 e

)

0

20

40

60

80

100

120

140

LATAM

PIIGS


Government Fiscal Balance

European Debt Crisis ► Latin America in Context

Current Account Balance

-3.1

-2.5-2.2

-2.1

-1.5

(9.1)

(7.3)

(4.7)

(2.7)

(1.2)

(10.0)

(9.0)

(8.0)

(7.0)

(6.0)

(5.0)

(4.0)

(3.0)

(2.0)

(1.0)

0.0

Po

rtu

gal

Gre

ece

Sp

ain

Bra

zil

Italy

Co

lom

bia

Peru

Ch

ile

Mexic

o

Irela

nd

2011-1

2 C

urr

en

t A

cco

un

t B

ala

nce (

% G

DP

)

LATAM

PIIGS

-3.4

-2.9

-1.5

-0.5-0.2

(10.0)

(6.8) (6.6)

(5.0)

(3.9)

(10.0)

(9.0)

(8.0)

(7.0)

(6.0)

(5.0)

(4.0)

(3.0)

(2.0)

(1.0)

0.0

Ire

lan

d

Gre

ec

e

Sp

ain

Po

rtu

ga

l

Ita

ly

Co

lom

bia

Me

xic

o

Bra

zil

Ch

ile

Pe

ru

2011-1

2 G

overn

men

t N

et

Bo

rro

win

g (

% G

DP

)

LATAM

PIIGS



Merci

Gracias

Obrigado

Thank You

Business

Economia global