Colombian economy: Grappling with problems.

Colombia, known more for its cocaine culture, has a thriving economy, whose GDP(purchasing power parity) for the year 2008, touched USD 400.00 billion. The country’s per capita GDP for the same year was nearly USD 9000.00. Not at all a bad figure, given the general impression of this Latin American country.

Colombia had enjoyed sustained economic growth till 2008, when the global recession caught up with it. Especially, in the context of its America-centric trade, the country has had to bear the burden of the overflow of the economic crisis from the U.S.

Colombia is said to have achieved remarkable progress in reducing poverty and unemployment, ever since it adopted pro-market policies, and opened up its doors to foreign investment. The passage of the FTA with the United States is keenly awaited, and it would open up more opportunities for economic development for Colombia and its citizens.

Coffee is the major crop of Colombia, and others include rice, tobacco, bananas, sugarcane, corn, oilseeds, cocoa, etc. In the industrial sector, food processing, textiles, footwear, clothing, chemicals, beverages, etc., are worth mentioning. The country exports petroleum, coffee, apparel, bananas, cut flowers, etc., and imports consumer goods, chemicals, industrial equipment, paper products, fuels, and energy. The United States, Venezuela, China, Mexico, and Brazil are among its major trading partners.

Presently, Colombia is grappling with problems like falling industrial production, rising unemployment, decline in exports to traditional markets like the U.S. and an overall decline in the GDP that is expected to grow by only 0.5% to 1.5% instead of 3% to 3.5% growth that was forecast earlier.

According to the National Statistics Department of Colombia, the overall economic growth for the year 2010 is expected to be in the region of less than 5%. The slight improvement in the global economic environment holds out a small opportunity to Colombia to regain its earlier growth trajectory, if a bit more sedately.

El Salvador economy: Slow and steady progress.

El Salvdor has been making slow and steady economic progress in the last few years, and has, in fact, become the third largest economy in Latin America. But for the current global economic slowdown, El Salvador would have continued to grow at the same rate this fiscal.

El Salvador adopted the U.S. Dollar as its national currency in 2001, and depends on the U.S. for two of its major sources of foreign exchange revenues, namely, exports and remittances. Salvadorans working in the United States are reported to have remitted nearly USD 4.00 billion in 2008, according to the country’s Central Bank.

Presently, with the American economy in trouble, El Salvador was bound to suffer, but with the first rays of a recovery visible on the horizon, there is yet hope for El Salvador.

Nearly 65% of El Salvador’s GDP is contributed by the agricultural sector, that also employs 58% of the labor force. Industry contributes about 25% to the GDP, while providing jobs to 25% of the workforce, and agriculture chips in with a contribution of 11% to the GDP, and employs 19% of the workforce.

The major agricultural produce of El Salvador is corn, rice, sugar, coffee, cotton, oilseeds, etc. Among the important industries are beverages, food processing, textiles, fertilizers, chemicals, etc. The country exports coffee, sugar, textiles, apparel, chemicals, etc., and imports raw materials, consumer goods, foodstuffs, fruits, etc.

The United States is the major trading partner of El Salvador and others include Latin American neighbors like Guatemala, Nicaragua, etc. El Salvador has done well in the last decade and reduced unemployment to a considerable extent. It has purposefully utilized the multilateral assistance to improve its economic position and bring relief to its citizens from poverty and unemployment.

The slight improvement in the global economic environment, if sustained for a good period of time, is bound to have a highly beneficial effect on the El Salvador economy, and improve its position further.

Jamaican economy: Payback time now.

Jamaica is sitting on a debt bomb, literally speaking. And now it appears to be time for a payback.

The current global economic crisis has exposed several myths about the strengths and weaknesses of the economies and economic systems around the world. Among the hardest hit are the ones considered to be the toughest and infalliable. One has to only look at the state of the American Banking and Financial Services industry to understand the point.

The Jamaican economy is sustained mainly by tourist revenues and inward remittances. The services sector provides employment to nearly 65% of the workforce, contributing over 60% to the GDP. And industry, dominated by bauxite and alumina related activities contributes about 35% to the GDP, while providing employment to 20% of the workforce. Among the other industries are cement, paper, chemicals, etc.

The country exports bauxite, alumina, coffee, chemicals, apparel, sugar, etc. And imports fuels, raw materials, machinery, capital goods, foodstuffs, consumer goods, etc. By far U.S.A. is Jamica’s major trading partner, both for exports and imports.

The major problem faced by Jamaica now is the huge debt burden that is said to be about 130% of the GDP. Other problems include the slower growth on account of the general global slowdown that has hit Jamaica’s tourist industry. This in turn, has led to increasing unemployment and underemployment. This vicious circle has inevitably resulted in burgeoning crime that is actually posing a hurdle to the economic progress and development of the country.

The Jamaican authorities are considering various options to deal with the situation. But in view of the tight economic position in most parts of the world, Jamaica’s options for a bailout appear to be limited. One of the options is a bailout package from the World Bank and the IMF.

As a matter of fact, Jamaica is paying for its past excesses now.

Bolivian economy: Facing tough times.

The Latin American nation of Bolivia is among the poorest in the region, with less than good relations with Big Brother, America, to boot.

The economy is sustained mainly on account of revenues from mining and natural gas. Tin, silver, and natural gas exports constitute over half of the foreign exchange earnings of the country. Apart from mining, the other important industries are petroleum, clothing, tobacco, food and beverages, etc.

Industry contributes to about 38% of the GDP, and provides employment to 18% of the workforce. Industrial production is in the range of 7.5% to 8% in fiscal 2009. Agricultural produce from Bolivia includes coffee, cocoa, cotton, soybean, corn, sugar, rice, timber, etc. Agriculture provides 40% of the workforce with a livelihood, and contributes to about 11% of the GDP. As far as the services industry is concerned, it contributes to about 52% of the GDP and provides employment to about 43% of the workforce.

The GDP growth rate is projected to be around 4.5% to 5%, while unemployment is around 7.5%. The country’s exports include crude petroleum, natural gas, soybean and derived products, tin, silver, zinc ore, etc., and imports include plastics, foodstuffs, paper, automobiles, etc. Its main trading partners include Brazil, Argentina, USA, Chile, etc. The balance of payments position of the country is comfortable.

The major problem facing Bolivia right now is the prospect of a severe drought on account of the falling water levels in Lake Titicaca, on account of the El Nino, which has struck the country repeatedly in the last few years. The country is also not able to attract foreign direct investment to develop its industrial and other potential. While falling commodity prices have reduced revenues available for developmental activities. All in all, it is tough going for Bolivia.

Ecuadorian economy: Confusion affecting growth.

Ecuador had already experienced a severe economic crisis in 1999, that saw the collapse of its banking system. That experience led to an economic restructuring and adoption of the U.S. Dollar as the national currency.

Since 2000 the country had been enjoying steady economic growth upto the year 2006, when the Government imposed a windfall revenue tax on foreign oil companies, that raised disputes about free trade. This was followed by official statements of possible defaults on its debt obligations, and the country actually defaulted on some of them in 2008. This dented the confidence of the business community, as well as its trading partners. To compound the problem, it was accompanied by a fall in oil prices, and decline in foreign remittances from Ecuadorians working abroad. This again led to the Government adopt several restrictive practices, within the scope of international trade laws, and austerity measures to tackle the problem.

Ecuador depends, mainly on three sources of revenues to oil its economy, namely petroleum, agriculture, and foreign remittances. Over 60% of the country’s export earnings are derived from export of petroleum products. Ecuador is also the largest exporter of bananas in the world. Other agricultural produce includes coffee, sugar, tropical fruits, rice, corn, palm oil, etc. Among the industries are food processing, wood products, pharmaceuticals, chemicals, textiles, etc. The country imports fuels, lubricants, industrial machinery,etc.

The country’s GDP is expected to grow by about 6% in 2009; the inflation rate is about 8.5%, and unemployment around 9%. Ecuador is rich in natural resources, and has good potential for economic growth and development. Prudent economic policies and diligent application of the same can take the economy to new heights. Ecuador has proved it once. But the present confusion in policy making has affected the prospects of future growth.

Honduran economy: Crisis situation.

Ever since the ouster of its President Manuel Zeyala, Honduras is drifting into a crisis situation. All economic activities have taken a hit, and are affecting the well-being of the citizens of this country.

Tourism, one of the major industries, and the major foreign exchange earner, mainly on account of the ancient Mayan ruins, is said to be down by about 40%. The overall economic growth is expected to contract by over 2.5%. Unemployment is up at 3.5%. Inflation is running at a high 11.4%. Public debt is up at 22% of the GDP. The country’s exports have taken a hit, and international development and aid agencies have stopped extending their services.

One of the original Banana Republics, so called for their dependence on the banana crop for their economic prosperity, Honduras is experiencing a downslide triggered by the economic downslide in the United States, on account of its over-dependence on the U.S.

Apart from bananas, the other agricultural produce of the country includes coffee, citrus fruits, corn, etc. Timber is also produced in large quantities. Among the major industries sugar, coffee, textiles, clothing, wood products, etc. The country exports coffee, gold, bananas, plam oil, timber, etc, and imports raw materials for industries, foodstuffs, chemicals, fuels, etc.

The industrial growth for 2009 was projected at 4.4% and the GDP growth at 4%. However, this was before the coup in June 2009. The next election is slated for 29th November, by which time the eocnomy is likely to have deteriorated further. In this bleak national landscape, the only reason to cheer was Honduras’ qualification for the Soccer World Cup.

Unemployment is a major problem, as one sector after other buckles under the pressure of economic adversities. An end to the political uncertainty and restoration of the economic activities is going to take some time. All concerned are anxiously waiting for the November election to bring about a welcome change in the country.

Uruguayan economy: No recession, but slower growth.

The Latin American country of Uruguay has had a successful run of positive economic growth for the past six years. This robust economic growth appears to have prepared the country well to take the impact of the current global recession without too much of discomfort.

The result is that the country’s economy is expected to grow only 0.6% in 2009, and 3.5% in 2010, according to the IMF. However, the Ministry of Economics of the country holds the view that its economy would grow by 1.2% in 2009, and 3.5% in 2010.

Paraguay is considered one of the more stable economies in that region, and has handled the fall out of the global crisis rather well. The impact of the crisis is said to have been practically absorbed in the first quarter of 2009 itself, and there may not be any nasty surprises in the remaining quarters.

The country has a fairly balanced economic sector, though agriculture and livestock breeding play a major role in the economic lives of the people. The country exports meat, rice, leather products, diary products, fish, wood, etc., and imports machinery, chemicals, petroleum, plastics, paper, etc. Brazil is the country’s major trading partner, so much so, that it is being considered to be a negative feature of its trading and commerce.

Paraguay has a well-educated workforce, and is beginning to develop its software industry. This sector has the potential to open job opportunities in a big way, which will help in reducing unemployment currently running at 10%.

One of the major problems facing the country now is the shortage of electricity that is affecting other sectors of the economy. However, the official mood is upbeat, and its projections for the near future at least, are positive. The Economics Ministry expects a growth of 1.5% in each of the remaining quarters of the current fiscal.

Brazil in recovery mode.

Brazil, the largest country in Latin America, both in terms of land area, and economy, seems to have switched on to a recovery mode. It is one of those countries tipped to become a regional super power in its own right, but whose progress has been interrupted by the global economic crisis.

The Brazilian President, Luiz Inacio Lula da Silva or more popularly called Lula, was optimistic about his country’s recovery, and is in favor of cutting the lending rate further from its current historical low of 8.75%. The Brazilian President based his optimistic pronouncement on the fact that industrial activity and employment levels in the second half of 2009 had gone up. Foreign capital continues to flow into Brazil’s markets. The stock market is bouyant. And the currency has been gaining through the year. No wonder Lula is in an aggressive mood.

However, in order to temper the gungho mood prevailing in Brazil, the President of its Central Bank, cautioned against “excessive euphoria”. Like elsewhere, a little positive news in the markets leading to euphoria, Brazil is no exception in the present circumstances.

Overall, it would appear that Brazil’s economy is in the recovery mode. And if the current trends are sustained, it may actually come out of recession neat and clean. Experts believe that Brazil’s economy should really start looking up in 2010. With a little fine tuning of the interest rate structure in consonance with the inflation rate, it must be possible to strike a happy combination of growth and caution.

On balance, it appears Brazil is on way to recovery, as the confidence of foreign investors would testify. Sustaining the present optimistic upturn is the challenge facing Brazil.