Luiz de Mello - The outlook for the OECD economies and effects on LAC: Issues for panel discussion FGV’s Brazilian Institute of Economics (IBRE) held, on 19 September 2014, the international seminar “Latin America and new global economic conditions”. The event addressed the issue of Latin American perspectives given imposed change, among other factors, caused by the slowdown in China and the gradual normalization of US monetary policy. The meeting was organized in three panels, which included national case studies from Argentina, Brazil, Chile, Colombia and Mexico. Visit FGV/IBRE's website at: http://www.fgv.br/ibre

1. América Latina
The outlook for the OECD economies and
effects on LAC: Issues for panel discussion
Luiz de Mello | 2014
A AMÉRICA LATINA
E AS NOVAS CONDIÇÕES
ECONÔMICAS MUNDIAIS
seminário

2. Luiz de Mello
OECD
FGV, Rio de Janeiro
19 September 2014

3.  Bumpy recovery in the
advanced economies
◦ Headwinds from high
unemployment and
ongoing fiscal
consolidation
◦ Activity has already
slowed down in LAC
(GDP growth < 2.5% in
2014)
Column1 2013 2014 2015
United States 2.2 2.1 3.1
Euro area -0.4 0.8 1.2
Japan 1.6 0.9 1.1
Germany 0.2 1.5 1.5
France 0.4 0.4 1.0
Italy -1.8 -0.3 0.2
United Kingdom 1.8 3.1 2.8
Canada 2.0 2.3 2.7
China 7.7 7.4 7.3
India 4.7 5.7 5.9
Brazil 2.5 0.3 1.4
GDP growth (OECD Interim Outlook)
Per cent
Note: GDP at market value adjusted for working days. For
Germany and India, this measure may differ from national
headline measures.

4.  There are signs of
a stabilisation of
growth rates in the
EMEs
◦ Not only PMI but also
other leading
indicators, like latest
OECD CLIs
3
GDP growth and Composite PMI
-6
-4
-2
0
2
4
6
8
10
12
14
40
42
44
46
48
50
52
54
56
58
60
Per centIndex
Emerging Markets PMI (LHS)
BRIICS GDP growth (s.a.a.r.; RHS)
Note: PMI values above 50 indicate expansion.
Source: HSBC; Markit; OECD National Accounts database; and OECD
calculations.

5.  Slow growth in global
trade and effect on
commodity prices
◦ Global trade has been
growing at much below
pre-crisis trend since
2012
◦ LAC exports have lost
steam, not least due to
price effects
-20
-15
-10
-5
0
5
10
15
20
-20
-15
-10
-5
0
5
10
15
20
Pre-crisis average
(1990-2007)
Global trade in goods and services
Volumes, year-on-year percentage change
Source: OECD National Accounts database.

6.  Normalisation of monetary stance and its effect on
appetite for risk and credit to EMEs
 Rising current account deficits and more fragile
external financing in LAC; stable external
indebtedness but rising budget deficits
 External credit shocks are good predictors of business
cycle in LAC

7.  Short-term policy requirements
◦ Fiscal and monetary policy mix and ability to
maintain counter-cyclical stance in the near term?
 Longer-term agenda: remove structural
impediments to faster growth
◦ Income gaps in LAC relative to OECD best
performers are due essentially to lower labour
productivity rather than lower utilisation
◦ Measures to enhance productivity growth in LAC?

8. Thank you!
www.oecd.org