Paraguay’s presidential impeachment puts Venezuela in Mercosur trade bloc

Latin America Update: August 8, 2012                     

Untapped Internal Markets of Venezuela Now Open for Mercosur Countries

Paraguay’s presidential impeachment puts Venezuela in Mercosur trade bloc. Mercosur = Argentina, Brazil, Paraguay (suspended), Uruguay, and now Venezuela.

Strike #1: Paraguay, known as a hub for trafficking of contraband and drugs, has gone through periods of political instability since the dictatorship of Alfredo Stroessner in 1989. On June 23, 2012, Paraguay’s senate voted to impeach its President and colorful left-wing Catholic Priest for fathering several children.

Strike #2: Paraguay’s Vice-President, Luis Federico Franco, is installed as interim president of Paraguay, a move that is considered an “express coup d’etat” by the members of Mercosur who vote to suspend Paraguay from its membership.

Strike #3: Without Paraguay’s vote, Mercosur moves to confirm Venezuela’s full membership, long opposed by the Paraguayan Senate due to concerns about Chavez’s democratic credentials.

Result : Venezuela is “in” and buying planes from Brazil’s Embraer, and Paraguay is “out” and claiming diplomatic isolation. As the saying goes, 3-strikes and you’re out.

#Update from Jock Chamberlain, President Murcadom Corporation#

 

Daniel Ortega “Institutional Dictator” in Nicaragua

Latin America Update: January 18, 2012

Daniel Ortega“Institutional Dictator” in Nicaragua

Daniel Ortega started his second consecutive term as President of Nicaragua last week and will have governed for 10 years when his current term ends in 2012. He was reelected in November of 2011 even though the Constitution of Nicaragua prohibits consecutive presidential terms. His political party also controls the legislative and judicial branches of the government, making him a de facto “institutional” dictator.

Panama Canal Construction to Finish in 2014

The new Panama Canal will allow huge freighters from Asia to bypass US West Coast ports and head directly to the Gulf of Mexico and East Coast ports. The $5.25-billion project will make the 50 mile Panama Canal wider and deeper. Construction is 32% complete with a projected completion in October of 2014. The new locks use 29 times more steel than the Eiffel Tower.

Countries visited by Iranian President Mahmud Ahmadineyad last week:

Venezuela, Nicaragua, Cuba, Ecuador

Cattle per Capita (CPC)

Uruguay has the highest Cattle per Capita (CPC) in the world with 12 million head of range-fed Hereford cattle for a population of 3.3 million people. That means there’s 3.7 head for each Uruguayan resident. Beef accounts for over 25% of Uruguay’s exports, more than $1.0 billion (USD). Too bad Ray Kroc never tasted a Big Mac in Montevideo. They say it’s the best in the World.

Raining Fish in Honduras

 Latin America Update: December 21, 2011

It’s Raining Fish in Honduras

Raining Fish

Image: boingboing.net

Legend has it that it rains fish in Honduras. It’s rumored that this phenomenon has been occurring for more than a century on a yearly basis between May and July. Dark clouds appear followed by heavy rain and hundreds of living fish on the ground. Beats paying $27.95 at Red Lobster.

Peru Gets Ready for 2012

Seven (7) free trade agreements signed by Peru with the European Union, Japan, Thailand, Mexico, Panama, Guatemala and Costa Rica will take effect in 2012.

Paraguay Blocks Venezuela’s Acceptance into Mercosur

Paraguay (pop 6.4M) continues to block Venezuela’s acceptance into Mercosur citing anti-democratic policies of the nation led by Hugo Chavez. Mercosur (Southern Common Market) is an economic and political agreement promoting free trade among Argentina, Brazil, Paraguay and Uruguay.

Record Q3 Growth in Colombia

Internal consumption, mining, construction, private & public spending, and foreign investment are responsible for some of the best economic growth data seen in Colombia during the past 4 years.

 

Latin America and the Global Corruption Index

Latin America Update: December 7, 2011

Global Corruption Index

Chile is the least corrupt country in the Americas according to Transparency International’s 2011 Corruption Perception Index. Chile (Rank 22) is considered even less corrupt than the United States (Rank 24), Uruguay (Rank 25), and much less corrupt than Venezuela (Rank 172).

GDP Growth Rates

Latin America is expected to grow 4.4% for 2011. Peru experienced a 6.5% GDP growth rate in Q3 2011 vs. 2% in the United States.

Did you know?

Bolivia which boasts one of the smallest GDP’s in Latin America ($19.3 Billion USD) has the largest natural reserve of lithium in the world. Soon you’ll be seeing descendants of the Incas driving Rolls-Royces.

Latin America at the United Nations General Assembly

Latin America Update: September 21, 2011

POLITICS:

Latin American countries will be well represented at the United Nations General Assembly in New York, September 23-27. (1) Brazilian President Dilma Rousseff will continue to push for a permanent seat on the UN the Security Council. (2) Argentine President Cristina Fernandez, expected to win re-election in October, will likely discuss the Falkland Islands sovereignty dispute. (3) Venezuelan President Hugo Chavez will not attend due to his 4th round of chemotherapy. (4) Peru will present its new President Ollanta Humala, who has taken a prudent tone in an attempt to calm nervous investors and maintain Peru’s robust economic growth.

ECONOMICS:

(1) Chile remains the most competitive economy in Latin America and projects 2012 GDP growth of 5.25%. (2) Argentina experienced 23% inflation over the past 12 months as a result of expansionary monetary policy, not entirely a surprise for a country with a history of debt and monetary crises. (3) Peru is one of the top growth economies with 2011 GDP growth of 6.5% and forecast growth of 6.0 % for 2012. (4) China announced $1 Billion (USD) in development loans to strengthen ties to Caribbean countries and bolster its influence in the region.

 

Ollanta Humala defeats Keiko Fujimori

Latin America Update: June 22, 2011

POLITICS:

(1) Ollanta Humala defeated Keiko Fujimori in Peru’s presidential elections. Although a close race, polls indicate a 70% approval rating for President-Elect Humala. Despite media headlines to the contrary, data indicates that Ollanta Humala will not follow the political path of Venezuela’s president Hugo Chavez. (2) Honduran President Porfirio Lobo accepted the return of exiled Honduran leader Manuel Zelaya days before the Organization of American States (OAS) voted to allow Honduras to resume its participation in the organization. (3) Cuban President Raul Castro turned 80 this month and publicly expressed his concern regarding the availability of a successor who will continue the socialist “revolution.”

ECONOMICS:

(1) China is aggressively locking down commodities around Latin America through large loans, investments and other financial arrangements. At the same time, Chinese companies have secured a decade’s worth of oil from Venezuela and Brazil, as well as steady supplies of wheat, soybeans and natural gas from Argentina. (2) The airline merger between TAM (Brazil) and LAN (Chile) could be delayed until March of 2012; the merger will create one of the world’s largest airlines. (3) Brazil celebrates that, “for the first time in history,” it’s risk of default within the Credit Default Swap (CDS) marketplace is less than the United States. (4) Claro, a unit of América Móvil owned by Mexican Carlos Slim (the world’s richest man), said that it will invest $1 billion in Peru over three years — the first major investment announced by a foreign firm since Ollanta Humala won the presidency.

Latin America Economies will Grow 4.2% in 2012

Latin America Update: May 2011

Politics:

Hugo Chavez’s increased moderation is a sign that “Chavismo” in Latin America is losing political power.  Bilateral relations include prudent negotiations over anti-drug policies with the government of new Colombian president Juan Manual Santos.  Peruvian presidential canditate Ollanta Humala (election on June 5th) is distancing himself from Hugo Chavez amid claims from the news media that his political adenda is closely related to Hugo Chavez.  Ecuadorian President Rafael Correa’s May 6th constitutional referendum was met with enough oposition that Hugo Chavez cancelled a celebratory visit to Ecuador this week. Hugo Chavez is up for re-election in December of 2012.

Economy:

According to IMF data, the economies of Latin America will grow 4.7 % in 2011 and 4.2 % in 2012, led by the export of raw materials from South America.  Inflation and overvalued currencies are the major economic concerns in the region.  Brazilian President Dilma Rousseff identifies an inflation rate of 6.44% as the primary concern for her government. Venezuela leads with 28% inflation followed by Argentina with annual inflation of 10%.  Uruguay follows with inflation of 8.17%.  High demand for commodities and a weak US dollar contribute to strong currencies through the region.

Export to Venezuela

Population: 27 Million
Total Imports: $191 Billion
US Imports: $48 Billion (25%)

Venezuela is the sixth most populous nation in Latin America, and an important market for US goods. However, due to President Hugo Chavez’s nationalization of several sectors of the Venezuelan economy, anti-market orientation, and virulent anti-U.S. rhetoric, U.S. exporters to Venezuela are well-advised to perform their risk-return calculations carefully, mindful of the uncertainties, but aware of the opportunities in the Venezuelan market.

Market Challenges

There exists significant discrimination against US products by government agencies and government-owned companies. However, there is strong consumer preference for U.S. products and technologies, and the majority of business people in Venezuela are similar in preferences and behavior to business people throughout Latin America. Exporters need to understand that the Venezuelan government does not represent the sentiment of business people in Venezuela. Sentiment notwithstanding, exporting to Venezuela requires significant due dillegence.

Market Opportunities

  • Oil and Gas Field Machinery
  • IT Equipment and Services
  • Auto Parts/Service Equipment
  • Electrical Power Generation Systems and Electrical Equipment
  • Medical Equipment
  • Chemicals
  • Travel and Tourism
  • Safety and Security Equipment