Economic climate improved in Latin America

The Economic Climate Index for Latin America (ICE) improved 4% in July compared to April this year, as a result of receding pessimism about the next six-month period. Despite the improvement, the index has remained low in historical terms. The data is part of the Economic Climate survey for Latin America conducted by Fundação Getúlio Vargas (FGV) in collaboration with Germany's Ifo Institute for Economic Research.

Despite the decreasing pessimism in the expectations for the upcoming six months, the perception of the economic situation in Latin American countries continues to deteriorate. The latest survey is in keeping with the trend that has been verified since July 2013, when a less favorable economic climate was reported in Latin America than the average of the 117 countries surveyed.

On a global scale, the economic climate worsened slightly from 110 to 106 points between April and July. “The decline of the indicator is due to the worsening assessments of current conditions, which went to unfavorable from favorable, while expectations remained stable and in the favorable zone of the economic cycle,” the release read.

In countries or regions with greater weight in global trade, the economic climate has worsened, but remained in the favorable range, as was the case with the United States and the European Union. A deterioration in the economic climate was also reported for China, the world's largest exporter, but the outlook improved and is within the favorable zone and above the past ten-year average.

According to the release, the improved outlook for the US and China suggest a favorable trend for global growth, albeit at a slow pace. It was noted though that the survey was carried out before the recently announced depreciation of the Chinese currency, “which could lead to an improvement in the expectations of that country, stimulated by exports.”

Translated by Mayra Borges