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Global gloom places Latin America on alert – Financial Times

Interesting article written by John Paul Rathbone, Latin America editor of the Financial Times.

Every day Luis Castilla, Peru’s finance minister, says he lights a candle and “prays that China won’t crash”.

His prayers are echoed by many in a region that remains one of the world economy’s few bright spots. South America’s commodity-rich economies grew 5 per cent in the first half of this year. Last year, these new motors of the world economy added half a percentage point to global output.

But slowing Asian demand and plunging commodity prices have raised the spectre that South America, having largely escaped the 2008-09 Great Recession, may not be so lucky this time around.

Main point = Potential new financial crisis in the “Developed World” + slow down in China = Scared Latinos

Click here to read the full article direct from the Financial Times

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ECLAC Sees Favorable Conditions for L.America-China Relations

The current economic and trade conditions in the Latin American and Caribbean region are highly favorable to furthering its trade and investment relations with China and the Asia-Pacific, a UN official said Friday.

“China has become a strategic trade partner for Latin America and the Caribbean, and there are many opportunities to achieve export and investment agreements in fields such as mining, engineering, agriculture, infrastructure, science and technology,” said Alicia Barcena, executive secretary of the United Nations Economic Commission for Latin America and Caribbean (ECLAC).

Barcena made the remarks while presenting a report titled “The People’s Republic of China and Latin America and the Caribbean: Towards a new phase in the economic and trade link” to mark Chinese Vice President Xi Jinping’s visit to the region.

The report says China is the main destination of Brazilian and Chilean exports and the second largest for Costa Rica, Cuba, Peru and Venezuela, but the region’s export basket to China remains centered on raw materials.

“It is possible and necessary to advance on trade diversification, the creation of a trade alliance between the Asia-Pacific and Latin America and the Caribbean, and to increase investment between both parties and enhance cooperation in innovation, education, science and technology,” Barcena said.

Click here to read the full article direct from http://english.cri.cn

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Real picture of Sino-Latin America ties [China Daily US Edition]

The author is deputy editor of China Daily US edition. He can be reached at chenweihua@chinadaily.com.cn

The Western media continually criticizes China’s role in Latin America as being “neocolonial” and claims it has an “insatiable demand for commodities”, so I was keen to observe the people’s attitude toward China during my trip to the region recently.

Judging from the enthusiasm for China displayed by government officials, businessmen, academics and ordinary people in Chile, the picture presented by the Western media has been seriously distorted.

At the UN Economic Commission for Latin America and the Caribbean, chiefs and experts attributed the fast trade and investment growth from China as a key factor for Latin America not only surviving, but thriving during the global financial crisis.

The same message was heard from top Chilean officials at the 5th annual meeting of the Chile China Business Council, which drew some 500 government officials and business people.

It is true that commodities are an important part of the trade between China and Latin America. However, that trade benefits not only China, but also Latin America and the rest of the world.

By being the world’s manufacturing workshop, China has paid a high environmental cost. Just half a century ago, that job was done in most of today’s developed countries when they were the global manufacturing center.

Many developed countries have an insatiable demand for China’s rare earth and, of course, the country’s cheap labor. But this never seems to bother the Western media.

In fact, China and Latin America are quickly diversifying and elevating their trade and investment as witnessed by the host of agreements signed by China and Cuba, Uruguay and Chile in the past few days.

China has already become Chile’s largest trade partner. Chinese businesses are increasing their presence in the South America country. The billboards on Santiago streets by automaker BYD and appliance firm Haier, and the Chinese businessmen who do trade, operate malls and run convenience stores are proof of China’s presence.

Both countries share a priority in development. Chile aspires to become a developed country and China wants to become a xiaokang (well-off ) society.

Chilean President Sabastian Pinera made constant reminders that the two countries are very close despite the geographical distance between them.

The mood among the ordinary people I met in Chile was also favorable to China. I have never heard the word “Welcome” as often as I did in Chile. Ordinary Chileans I met in cafes, museums, parks in Santiago and Pablo Neruda’s colorful and hilly neighborhood in historic Valparaiso greeted me with “Welcome to Chile”.

What Pinera said was true. China and Chile are very close. In South America, Chile was the first country to recognize China’s market economy status, the first to sign a free trade agreement with China, the first to establish diplomatic ties with China and the first to support China’s WTO accession.

Of course, China and Latin American countries, all belong to the developing world and are going to compete with each other. But we all know that competition is a good thing and there is no need to distort the picture simply because of competition.

Latin American nations are independent countries and they are no one’s backyard. For China and Chile, they are really neighbor countries separated only by the Pacific. You can literally fly from Beijing to Santiago without passing over any other country.

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China Latin America Trade Jumps in 2010

Presidents Dilma Rousseff and Hu Jintao in China last month can celebrate rising two-way trade. (Photo: Roberto Stuckert Filho/PR)

China’s trade with Latin America is growing twice as fast as U.S. trade with the region.

BY RUTH MORRIS of the The Latin American Business Chronicle

SHANGHAI — China’s dragon breathed fire into Latin America in 2010, as trade between the two sides shot up by a spectacular 51.2 percent, to $178.6 billion, and memories of the economic recession melted away.

China’s trade with Latin America is growing at nearly twice the level of US trade with the region. It also is significantly higher than the 31 percent increase in trade between the European Union and Latin America last year.

Click here to read more direct from the Latin American Business Chronicle

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This week’s Economist “America’s Section”

1. Peru’s Presidential Election: The risk of throwing it all away

Populists like Ollanta Humala (pictured below) threaten to overcome divided moderates in one of Latin America’s fastest-growing economies

LIVING in Peru’s capital is like watching a film on fast-forward. Every few months you can spot a taller skyscraper, a swankier hotel, glossier shops and restaurants, new roads—and more traffic. House prices in the leafier neighbourhoods have almost doubled in the past two years. Rapid change is not confined to Lima. The only provincial cities of any size that do not already boast one or more new shopping malls and multiplex cinemas are about to get them. These are the tangible results of a decade in which Peru’s GDP grew by over 5% a year, the highest rate among Latin America’s bigger economies.

Since 2006 the growth has accelerated, averaging 7% despite the world recession. Some good effects have been widespread. The share of Peruvians living in poverty fell from 49% in 2004 to 35% in 2009. Much of the Pacific coast, where farmers export asparagus, grapes and a plateful of other products, enjoys full employment. Though many parts of the Andean highlands remain poor, the arrival of paved roads is cutting journey times, and some farmers there have joined the export boom with artichokes and herbs. Social indicators have improved. Between 2005 and 2010 Peru climbed 24 places in the United Nations Human Development Report, which ranks countries by income, life expectancy and educational measures. It now scores better then Hugo Chávez’s Venezuela… click link above to continue reading the full article direct from the Economist

 

2. Kin selection — When family replaces party

KEIKO FUJIMORI’S unique selling point in Peru’s presidential election (see article) is her surname. In 1990, when she was 15, her father, Alberto Fujimori, won the presidency and stayed for ten years. Despite his many faults, Mr Fujimori, who is now in jail for corruption and human-rights abuses, retains the support of some Peruvians, who credit him with defeating the Maoist terrorists of the Shining Path. The family political brand helped Ms Fujimori get more votes than any other candidate for Peru’s Congress in 2006. Now she hopes it will take her to the presidency.

She is part of a growing Latin American trend for politics to become a family affair. In Argentina Cristina Fernández succeeded her husband, Néstor Kirchner, as president in 2007. Until his sudden death last October he had been expected to try to take back the presidential sash at an election this year. If Ms Fernández opts to run again, her son will be among her political advisers. Her opponents will probably include Ricardo Alfonsín, whose father was president in the 1980s… click link above to continue reading the full article direct from the Economist

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Bloomberg — Inter-American Bank to ‘De-Dollarize’ Region With Local Currency Funds

The Inter-American Development Bank plans to help Latin American countries “de-dollarize” their economies by providing more financing in local currencies, said bank President Luis Alberto Moreno.

“Part of our role should be to help the countries in the region de-dollarize and to have more of their stock of debt in local currency,” Moreno said in an interview during the bank’s annual meeting in Calgary.

Surging foreign investment and faster economic growth are leading to stronger currencies in countries such as Chile, Brazil and Mexico. The region accounted for twice as much of global capital inflows in 2009 as it did in 2006, Moreno said.

“That is having a huge impact on our exchange rates, on the tradable sector,” Moreno, 56, said. “All countries are worrying about the impact of overheating.”

To offset the currency gains and to develop capital markets across the region, the Washington-based lender plans to increase borrowing in local currencies, while allowing more borrowers in the region to convert their IDB loans from U.S. dollars.

Click here to read the full article from Bloomberg

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MUST READ ARTICLE – Obama / US Wake up! Look South for Opportunities

Finally, FINALLY… an article which logically presents the incredible opportunities for the US in Latin America… it’s neighbors — [ http://www.latinbusinesschronicle.com/app/article.aspx?id=4809 ]

Obama it’s time as we say in Peru to “ponte las pilas” and look South to your long ignored neighbors.

” For Obama, a New World to Discover — “The Americas will remain a new world of opportunity for U.S. workers and farmers if Washington is prepared to lead. There’s no time like the present for American business to get a piece of the action — or for President Obama to help open the door.” ~~ Latin America Business Chronicle

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Latin American in 2011

I came across a few interesting articles today which attempt to outline what we can expect, for the better or worse, from the greater Latin American region this year.

Latin America in 2011: the year ahead – The Global Post

FACTBOX-Key political risks to watch in Latin America – Reuters

Latin America 2011: Expert Q&A
– The Latin Business Chronicle

Stable Outlook for Latin America Oil and Gas Industry in 2011 – BUSINESS WIRE / Fitch Ratings

Enjoy

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China’s Sinopec buys Occidental’s Argentina assets for $2.5 bln

Reuters reports –

* To be Sinopec’s first upstream exposure in Argentina

* Deal represents fair price – analyst

* Occidental concessions in Argentina due to expire in 2017

* China average oil demand grew about 13 pct y/y in Oct

(Adds analyst quotes, deal history)

By Jim Bai and Farah Master

BEIJING/HONG KONG Dec 10 (Reuters) – China Petrochemical Corp, parent of Sinopec Corp , agreed to buy all of U.S.-based Occidental Petroleum Corp’s oil and gas assets in Argentina for $2.45 billion, marking the energy giant’s first foray into the upstream market in the Latin America country.

Sinopec’s move adds to a growing list of outbound deals in the natural resources sector by state-backed Chinese firms in the past two years as the world’s most populous nation scrambles to secure resources for its surging economy.

Click here to read the full article, direct from Reuters

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Spainish oil giant Repsol makes BIG nat gas discovery in Argentina

December 9, 2010 -- South America --, Argentina, Commodities, Energy, Natural Gas, Spain Comments Off

Img courtesy of Wikicommons

Repsol YPF SA, Spain’s largest oil company, found 4.5 trillion cubic feet of unconventional natural gas in Argentina, the country’s largest discovery in 35 years.

Repsol found so-called tight gas reserves at the Loma La Lata area in the Patagonian province of Neuquen after its YPF unit drilled four exploratory wells in the region, according to a statement from Madrid-based Repsol today. The company also said that it discovered so-called shale gas in the province.

Crude output at YPF, the biggest Argentina-based company by market value, climbed in the first nine months of the year for the first time since 2003 as Chief Executive Officer Sebastian Eskenazi seeks to grow in Argentina and neighboring markets. The company plans to invest as much as $3.5 billion a year in countries such as Brazil and Colombia as Argentine output slows.

Click here to read the full article, direct from Bloomberg

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