A detailed PESTEL analysis of the South American and the Caribbean region

1. Latin America and
the Caribbean
Regional Analysis

2. Introduction
4th Largest Continent
41Countries
5.6%of the world’s GDP

3. Political

4. Government System
Mostly Republics with written constitutions.
Argentina
Venezuela
Brazil
Federal systems
Bolivia
Chile
Peru
Centralized
systems
French Guinea;
Falkland
Islands
French; British
territories
South
America

5. Government System
Mostly some form of republics
• Guatemala and Honduras: constitutional democratic
republic
• Costa Rica: democratic republic
• Panama: constitutional democracy
• Belize: parliamentary democracy

6. Government System
Caribbean
Islands
The Bahamas and Jamaica have
constitutional parliamentary democracies
Cuba is a Communist state.
Puerto Rico is a commonwealth

7. Elections in Latin America
3 October Elections
Uruguay
June
2014
Columbia
Elections
Mostly fair
Some allegations of corruption
Bolivia
Brazil

8. Foreign influence:
Previously USA had
a lot of influence
Most governments
remain full term
In recent times the
South Americans
favored their own
leftist leaders.

9. Corruption
Caribbean
20-30
Least corrupt
The Bahamas
South America
30-40
Chile
71
According to Corruption Perception Index

10. Political trends
• After WWII: movement toward more democratic forms of
governance and multi-party states
• 1960s: predominance of military and dictatorial regimes
• 1980s: shift toward more democratic systems with multi-party
elections, and almost all colonies had become either self-governing
or independent.
• Present: more socialist.

11. Re election trend
1980s:
Cuba, Nicaragua, the Dominican
Republic, and Paraguay
Present:
16 Latin American countries allow
reelection
Reelection is limited to non-consecutive terms or two
consecutive terms, Exception: Ecuador
Rafael Correa (Ecuador 2013)
Juan Manuel Santos (Colombia)
Seeking own reelection
in 2014.
Dilma Rousseff (Brazil)
Evo Morales (Bolivia)

12. Promote
growth
Diminish
economic and
social
inequality
Fight poverty
Main political
agendas

13. Foreign Relations
USA-Latin America relationship strains
(U.N.'s Economic Commission on Latin America and the Caribbean)
In 2011, China replaced
USA as the major trading
partner for Brazil and Chile.
China signed free trade
agreements or trade deals
with Chile, Peru, Cuba and
Costa Rica
Colombia signed a trade agreement with
Canada and is launching negotiations for
a free trade agreement with China
Russia expanding its long standing
military presence in Cuba and Venezuela
Improving relationships with the other
South American and Caribbean countries

14. Economic

15. OVERVIEW:
LATIN AMERICA & CARIBBEAN
GDP: $5.655 trillion in 2013
Growth rate: 2.6 % in 2013 from 3.1% in 2012
Economic growth highest in Paraguay (13%), followed by Panama (7.5%),
Bolivia (6.4%) and Peru (5.2%)
Terms of Trade : 2.5% decline in 2013
Foreign Direct Investment: US$ 188 billion in 2013, 6% more than 2012.
Investment was up in economies: Suriname (86%), Panama (61%) and Bolivia
(35%). FDI flow to Central America rose (21%), Caribbean declined (-31%).
Employment:
Unemployment fell from 6.4% in 2012 to 6.3% in 2013.
highest unemployment: Colombia (10.6%), Costa Rica (8.3%)
Inflation:
Lowest inflation rate: Peru (2.8%)
Highest inflation is seen in Venezuela (63.4%) and Argentina (18.2)

16. GDP: 2.246 trillion
GDP Growth Rate: 2.5%
Unemployment: 5.0%
Inflation: 6.5% (2014)
BRAZIL
• Expected recovery did not materialize
• Despite economic slowdown, Brazil continued to
receive strong FDI flows
• Limited participation in auction for exploration rights
in Libra oil field
• Government prioritized containing inflation by
raising SELIC interest rate to 9.5% in 2013 from a
record low of 8% in 2012
• Opening of ports to private investment
• S&P cuts Brazil’s credit rating , citing poor growth

17. ARGENTINA
• Growth fell in 2012, rises in 2013 but inflation
persisted
• IMF censure hindered access to international
capital markets
• S&P lowered the country risk rating to seven
levels below investment grade.
• Overvalued exchange rate
• Investment scheme for shale deposit
development offered incentives
• Nationalizations continue
GDP: 611.8 billion
GDP Growth Rate: 3.0%
Unemployment: 7.5%
Inflation: 18.2% (2014)

18. GDP: 277.2 billion
GDP Growth Rate: 4.1%
Unemployment: 6.5%
Inflation: 4.5% (2014)
• Decline in GDP growth rate
• Exports softened but FDI surged
• Decline in world copper prices negatively
affected Chile, the world’s largest producer
• Highest credit rating in Latin America
• Favorable access to bond markets, environment
remains very investor friendly
• Net FDI tripled in 2012
CHILE

19. GDP: 202.3 billion
GDP Growth: 5.8%
Unemployment: 5.9%
Inflation: 2.8% (2014)
• Seems to be losing momentum
• GDP Growth was 6.0% in 2012 and has declined
in 2013
• Falling metal prices, weaker business
confidence
• Satisfactory external performance
• Chinese slowdown dampened export growth
• FDI continued to increase
• Credit rating increased to BBB+, second only to
Chile, and above that of Brazil
PERU

20. GDP: 438.3 billion
GDP Growth Rate: 1.3%
Unemployment: 7.1%
Inflation: 63.4% (2014)
• Growth collapsed and inflation exploded
• Scarcities in essential consumer goods, foreign
exchange shortages, gap between the official
dollar exchange rate and black market rate,
• Increased dependence on China
• Chinese aid-for-oil compensated for very weak
FDI flows.
• Lower oil prices and falling production
contributed to lower export growth
• Oil continues to account for 96% of exports.
• Venezuela completed its full integration into
Mercosur.
VENEZUELA

21. THE CARIBBEAN
• GDP growth 0.75% in 2013 from close to zero in 2012
• Construction activity bottomed out, tourist arrivals and spending
underperform.
• Stronger growth among commodity exporters- Guyana and Suriname
• Haiti’s economy expanded 4% due to ongoing reconstruction spending
and increased agricultural output and textile exports
• Low inflation
• Current account deficits averaged 17% of GDP in 2013, reflecting a high
oil import bill and persistently poor competitiveness
• Deficits financed through net FDI and official flows, including IMF
• Financing from Venezuela’s PetroCaribe important in some countries
• Fiscal balances deteriorated, public debt levels high

22. Social

23. Population
Guatemala 15.419 mil.
Honduras 8.07 mil.
El Salvador 6.32 mil.
Colombia 48.37 mil.
Venezuela 30.30 mil.
Peru 30.29 mil.
The Caribbean Brazil + The Southern Cone
Cuba 11.29 mil.
Dominican Republic 10.29 mil.
Haiti 10.26 mil.
Andean South America
Brazil 199.98 mil.
Argentina 41.42 mil.
Chile 17.60 mil.
Central America

24. Population: Ageing
Population aged over 65 years
Country 2010 2050
Columbia 5.6% 17.5%
Peru 6.0% 17.1%
Venezuela 5.6% 16.8%
Country 2010 2050
Argentina 10.6% 19.5%
Brazil 6.9% 22.9%
Chile 9.2% 23.6%
Country 2010 2050
Cuba 12.6% 31.1%
Dominican Republic 6% 16.4%
Haiti 4.4% 12.8%
Country 2010 2050
Guatemala 4.4% 9.9%
Honduras 4.3% 13.3%
Panama 6.8% 18.4%
Source: ECLAC, Statistical Yearbook for Latin America and the Caribbean

25. Income Distribution
Poorest income quintile:
Wealthiest income quintile:
5%of total income
47%of total income
Argentina .475 Columbia .536 Honduras .567 Dominican
Republic
.517
Brazil .567 Peru .449 Guatemala .585
Chile .516 Venezuela .405 Panama .531 Uruguay .379
Source: ECLAC, Statistical Yearbook for Latin America and the Caribbean

26. Rise of the Middle Class
1992 to 2009:
The middle class (as a
percentage of total
population)
Brazil :
14.73% to 31.5%
Chile:
23.67% to 42.32%
Source:
World Bank, ‘Economic Mobility and the Rise
of the Latin American Middle Class’ (2013).

27. Class composition in Latin America by income percentile, selected countries, 2009

28. Adult Literacy Rate
Chile
Source: UNESCO, ADULT AND YOUTH LITERACY
National, regional and global trends, 1985-2015
Brazil
Colombia
Venezuela
90.0%
98.6%
93.6%
95.5%
Guatemala
Honduras
Panama
Cuba
Dominican
Republic
75.9%
85.1%
94.1%
99.8%
90.1%
Argentina 97.9%

29. Life Expectancy at Birth
Chile: 80.0 years
Brazil: 73.9 years
Argentina: 76.3 years.
Guatemala: 72.1 years
Honduras: 73.8 years
Panama: 77.6 years
Source: Human Development Report 2014
70.8
years
World
Colombia: 74 years
Peru: 74.9 years
Venezuela: 79.3 years.
Cuba: 79.3 years
Dominican Republic: 73.4 years
Haiti: 63.1 years

30. 2013 HDI index for LAC region 0.740
Chile 0.822
Cuba 0.815
Argentina 0.808
Haiti 0.471
Source: Human Development Report 2014
Living Standards

31. Migration
Argentina
Venezuela
Chile
Brazil
Increasing Intra-regional flows
The gender dimension
4 Main Destinations

32. Technological

33. Access to Electricity
Country Access to Electricity in 2011( % of Population)
Argentina 97.2
Bolivia 86.8
Brazil 99.3
Colombia 97.4
Chile 99.4 (2010)
Costa Rica 99.1
Cuba 97.5
Dominican Republic 96.1
El Salvador 91.7
Ecuador 95.5
Guatemala 81.9
Haiti 27.9
Honduras 83.3
Jamaica 92.8
Nicaragua 77.7
Paraguay 98.2
Peru 89.7
Trinidad & Tobago 99
Uruguay 98.6
Venezuela 99.6
source: data.worldbank.org
World Energy Outlook
www.iea.org/topics/energypoverty/
7% of the Regional Population- live
without grid-connected electricity
6 countries account for 84% of total
electricity production in the region
Haiti Lowest Access to Electricity

34. Telecommunication
LAC households subscribe to
mobile services
Farmers receive messages on
market prices and weather reports
84%
Chile
average price of a
handsets more than
halved
households with mobile
access increased by
40% In Nicaragua

35. Chile
Uruguay
Argentina
Bahamas
Puerto Rico
source: data.worldbank.org
Access to Internet
Average internet penetration >30%
>50%

36. Clean tech and Renewable energy
“Latin America already has an energy matrix that is cleanest of all region:
in terms of power generation, we have almost 70% renewables-three
times the world average”
Hydro Natural gas
Brazil: Leader in hydro power
Chile: hydro-electric power
generation
6th largest reserve in LAC in Peru
44% of electricity in 2010 from natural gas
Clean Technology Fund and UNEP’s Green Growth Initiative

37. High Technology Exports
Brazil, Costa Rica & Argentina- top 3 exporters
Country High Technology Exports in 2012
source: data.worldbank.org
( Current US$)
Brazil 8,820,260,626
Costa Rica 2,719,083,321
Argentina 1,945,836,328
Colombia 516,973,271
Chile 503,343,087

38. Government spending on R&D
Average spending on R&D 0.84%
Brazil Highest Spender
Country Research & Development Expenditure in 2011 (%
of GDP)
Argentina 0.65
Brazil 1.21
Cuba 0.27
Paraguay 0.05
Uruguay 0.43
source: data.worldbank.org

39. Legal

40. Trade Barriers and Openness
World Economic Forum’s 2014 report on trade openness:
Out of 132 nations:
Brazil 86th
Argentina 95th
South-South
trade boom
World’s most closed economy
Venezuela
Committed to free trade
Chile, Peru, Colombia

41. Trade Blocs: Mercosur
A sub-regional bloc
Argentina
Brazil
Paraguay
Uruguay
Venezuela
5
Members
Purpose:
“promote free trade and the fluid movement of goods, people, and
currency”

42. Trade Blocs: Pacific Alliance
A Latin American trade bloc
Chile
Colombia
Mexico
Peru 4
Members
36% of Latin American GDP
Purpose:
“seeks to advance free trade and economic integration among the member
states, as well as a visa-free travel area, and common diplomatic
representation”

43. Trade Blocs: CARICOM
Caribbean Community and Common Market
Chile
Colombia
Mexico
Peru 15
Members
EU and CARIFORUM enjoy equal trade and investment rights
Purpose:
“to promote economic integration and cooperation among its members, to
ensure the benefits from integration are equitably shared, to coordinate
foreign policy”

44. Minimum wage
Highest in Bahamas: $696
Lowest in Bolivia: $118
Labor Laws
5.7 mil.
working children
10 years
minimum working age in Bolivia
40-48 hours
working hours per week

45. Property Rights
Chile ranks the highest
Venezuela and Haiti
among the worst 10 in the
world
Source – IPRI 2013

46. Ease of Business
Chile
Ranked 34 in the world.
Days to start a business
– 6 days
Colombia
27 reformations since
2005
Single window of trade
5 of the top 10 from
the Caribbean

47. Environmental Regulation Reform
Ecuador
70% tax on windfall profits of mining companies
Brazil
Suit against Chevron for oil spillage
Peru
Reformation of mining law 2014

48. Environmental

49. Latin America and the Caribbean
Andean Glaciers
AMAZON
‘the lungs of the world’
5,500,000 square km. rainforest
390 billion individual trees
Home to
The Amazon Rain Forest
Galapagos Islands
Atacama Deserts
One in ten known species in the world lives in the Amazon rainforest

50. Deforestation
20% Amazon rainforest deforestation (22,392 km2 per year)
50 Football field equivalent area destroyed/minute
Reasons
• Foreign demand for palm oil, beef, soya and wood products worth an
estimated $61 billion annually.
• Conversion of forest to agricultural land (at a rate of around 110,000 ha/year)
• Dams for hydroelectric power

51. In just a decade, Brazil
has reduced
deforestation by 79%
using Remote Sensing,
Updated Forest Code in
2012
One Haitian, One Tree
Initiative
Brazil turned down deforestation deadline initiative during the Climate
summit in New York, 2014
Norway pledged to spend 350million dollars to protect forests in Peru

52. Carbon Emission
Rapid growth in gasoline
consumption and in its vehicle fleet
Deforestation of Amazon Carbon
Sink
The region's GHG emissions only
represent 9% of the global total.
Energy sector (42%), agriculture
(28%), Forestry ( 21%)

53. Climate Change
1.6°C-4°C Rise in temperatures
• Andes Glaciers in Peru and
Ecuador melting
• Island nations like Grenada will
spend more than 50% of GDP
to adapt
• Mesoamerican coral reef could
collapse by 2050 due to ocean
acidification.
US$ 16.8-21.5
trillion/year Adaptation costs
Extreme Weather Conditions
• Drought in Brazil due to
absence of the ‘flying rivers’
• Record flood in Sao Paolo
and Northern Bolivia
(World Bank 2010)

54. Tourism
• In 2013, over 48.4 million international tourist arrivals
• 5.4 million tourists to Brazil
• 19.5 million tourists to the Caribbean
• Rising Eco-tourism in the Caribbean – 14.8 percent of the GDP
• Tax incentives for new projects –
Galleon Bay in Antigua - Reduction of 75% on property tax
Curacao Airport City – Tax Holiday
Source: Wikipedia, CAIPA

55. Impact of Climate Change on Business
Agriculture - 3.1 billion dollars a year in losses after 2020. Yields
will fall 25 percent by 2050.
Ex – Reduced Coffee Production in Colombia
Tourism - Sea level rise of 1 meter - 266 out of 906 tourism resorts
at risk
US$ 1,430 million per year losses in tourism expenditure in the
Caribbean

56. Thank
You