Shannon K. O'Neil

Latin America's Moment

O'Neil analyzes developments in Latin America and U.S. relations in the region.

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Looking Back at 2012: Latin America’s Economic Development

by Shannon K. O'Neil
December 21, 2012

Brazilian worker assembles a Volkswagen car at Sao Bernardo do Campo Volkswagen plant, near Sao Paulo (Nacho Doce/Courtesy Reuters). Brazilian worker assembles a Volkswagen car at Sao Bernardo do Campo Volkswagen plant, near Sao Paulo (Nacho Doce/Courtesy Reuters).

Looking back at the past year, many of the posts on Latin America’s Moment touch on the region’s economic development, and its trade and investment ties with the rest of the world. Here is a recap of some of the main themes.

Overall, 2012 was a year of economic optimism for most Latin American economies. The IMF’s Latin America Economic Outlook report, which I write about here, was quite bullish. And ECLAC announced that Latin America hit an all-time $150 billion high in foreign direct investment, led by Brazil. Also crucial in the region’s economic development were the growing number of women in the workforce.

Brazil’s economy still dominated the headlines, though the positive near consensus faded, as analysts grappled with slow growth. I argue here and here that, while Brazil’s hype may have been initially overdone, the country still boasts a solid consumer base, a relatively high GDP per capita, and a successful conditional cash program that is helping to pull many into the middle class.

Meanwhile, interest in Mexico’s economy is rising, despite continued insecurity and violence. This has a lot to do with its economic openness, global competitiveness, and close links to the United States. To see the evolution of Mexico’s (and other Latin American countries’) exports click here.

In terms of economic ties, many focused in 2012 on China. Though important for a few big commodity producers, as I note here, the promise of Chinese involvement and investment is much greater than the reality. Economic ties with the European Union are broader and arguably more important, with trade reaching over $200 billion. Still, Latin America’s most important economic partner, whether measured by trade or foreign direct investment, remains the United States.

For more analysis of Latin America and the global economy, don’t forget to check out this video of Claudio Loser and Antoine van Agtmael discussing their thoughts here at CFR.

Here’s to another successful year for Latin America’s economies in 2013 and happy holidays to all!

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