How Economic Climate Index of the development of Latin America 2010
Author: David Y. Chin
The Economic Climate Index for Latin America scored 6.0 points in July, the highest since April 2000.
The business climate in Latin America in July reached its highest level in a decade, according to a study released yesterday by the Brazilian economic research center Elution Vargas Foundation and the Institute of Economic Research (If), University of Munich (Germany .)
The so-called Economic Climate Index (ECI), the two institutions measured quarterly, scored 6.0 points in July, the same April 2000 and only to the October 1997 (6.3 points). The indicator has been increasing gradually since January 2009 (2.9 points), when it fell to its lowest level by the global crisis. According to the study, the level of July is “very favorable” and significantly higher if one considers that the average in the last ten years was 5.1 points.
Although the report says that Latin America entered a boom phase of the economic cycle for the first time since July 2007, also warns that expectations are less optimistic than in the previous quarter.
“The situation in Latin America suggests caution. In the countries analyzed the expectations began to present a negative trend since October 2009 but the current situation assessment took the opposite way,” warns the report. While the Present Situation Index (ISA, assessment of economic conditions) increased from 4.7 points in April to 5.8 in July, the Expectations Index (EI, prospects for the coming months) fell from 6.4 up 6.2 points over that period.
The Economic Climate Index is the average of the assessment that 149 specialists from 17 countries across the region are on the current economic situation (ISA) and expectations for the future (IE). According to the study, while the Economic Climate Index for Latin America rose to 6.0 points in July, the world at large, including developed and developing countries fell 5.9 points in April to 5.7 points July.
The report notes that Argentina, Chile, Mexico and Paraguay experienced an increase in its Index of Economic Climate in the last quarter and were in an area considered positive already in Brazil, Chile, Colombia, Peru and Uruguay.
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