Latin America’s business climate improves in first quarter

The economic climate in Latin America improved in the first quarter of the year, with advances in six of the ten leading countries analyzed, according to a report by Brazil’s Getúlio Vargas Foundation (FGV).

Specifically, the Economic Climate Indicator (ECI) for Latin America rose 6.9 points between the fourth quarter of 2022 and the first quarter of 2023 and stood at 73.4 points, the highest level since the fourth quarter of 2021, although it remains at low levels in historical terms.

Both indicators that make up the ECI rose in the quarter.

The Present Situation Indicator (ISA) increased by 9.8 points, and the Expectations Indicator (EI) by 4.0 points.

In both cases, the indicators remain in the unfavorable zone (below the neutral zone of 100 points), with the ISA at 76.8 points and the EI at 70.1 points.

By country, Paraguay led the improvement in the region’s economic climate, with a rise in its ECI of 47.6 points in the first quarter. It recovered from the severe drought and lost exports to Russia in 2022.

The environment also improved in Peru, Mexico, Ecuador, Argentina, and Chile.

It is noted that, except for Chile, which maintained the Q4 2022 EI level, all countries that recorded an increase in the ECI also did so concerning the ASI and EI.

However, the largest economy in the region, Brazil, is in the group that recorded declines in all three indicators in the first quarter of 2023.

Brazil’s ECI fell 11.0 points to 73.5; the FSI fell 21.7 points to 70.6, while the EI had a smaller reduction, minus 0.4 points to 76.5 points.

The Latin American Economic Survey monitors and predicts economic trends based on experts’ quarterly information on their countries’ economies.

With information from Xinhua