Inflation in Latin America 2016
Financial outlook in Latin America
2017
world
2,8 3,1
latin america
8,5 4,2
40,5 Argentina 24,8 Bolivia
3,6 2,7
Brazil
8,7 3,0
Chile
3,8 2,3
Colombia
7,5 4,9
Costa Rica
0,0 2,6
1,7 Ecuador -0,2 El Salvador
0,6 2,0
Guatemala
4,4 5,7
Honduras
2,7 4,7
Mexico
2,8 6,8
Panama
0,7 0,9
Paraguay
4,1 4,5
Peru
3,6 1,4
Dominican rep.
1,6 2,9
Uruguay
9,6 6,6
Note 1: Latin American average does not include Venezuela due to its exceptional circumstances. Note 2: The inflationary increase in Venezuela has been measured above 3 digits since 2016, so it was not taken into account for this graphic. In 2016, the Central Bank of Venezuela (BCV) reported to the IMF an increase of 302.7%, while the Venezuelan National Assembly indicated that inflation reached 857.6%.In 2017, the BCV didn’t present new figures, however the National Assembly reported an increase of 2,616%.
Source: ECLAC and IMF
The financial realm is particularly favorable for Latin America and the Caribbean, which can benefit from low international interest rates, lower financial volatility and declining risk perceptions, according to the ECLAC analysis. The organization also highlights that current inflation levels in the region are the lowest they have been since the end of 2013, stressing the rapid drop of this indicator since mid-2016, with the exception of Venezuela. This analysis is consistent with the information published by the Federation of Latin American Banks (FELABAN), which delves into this regard, noting that the region showed a gradual recovery in 2017, driven mainly by positive figures from Brazil and Argentina. Still, despite the optimistic assessments of these organizations, some situations in the world create uncertainty, for example, changes in the internal policies of developed countries such as the trend towards greater financial deregulation; the tax reform proposed in the United States; geopolitical risks resulting from greater protectionism and nationalism that has been observed in some countries, such as the United Kingdom with Brexit in 2017. Regarding the behavior of exchange rates of Latin American countries against the US dollar, it should be noted that as of September 2017, FELABAN reported a low volatility in the depreciation of currencies against the US currency. Later in this chapter, this behavior will be discussed for each country.
