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Brazil's economy is becoming much less competitive, according to Swiss-based business school IMD. (Photo: Government of Feira de Santana City)
Wednesday, May 31, 2017
Trade Talk

Competitiveness: Brazil, Mexico Worsen


Will Michel Temer stay or leave as Brazil president?

BY LATINVEX STAFF

Brazil, Mexico and Colombia worsened their competitiveness the past year, according to the latest competitiveness ranking from Swiss-based business school IMD.

Among 63 economies worldwide, Brazil fell four spots to 61st place, while Mexico, Colombia and Argentina each fell three spots to 48th, 54th and 58th place, respectively. Peru fell one spot to 55th place and Venezuela fell two spots to 63rd and last place.

Of the seven Latin American countries on the ranking, only Chile improved, moving up one spot to 35th place.

The bottom of the ranking is largely occupied by countries experiencing political and economic upheaval. “You would expect to see countries such as Ukraine (60), Brazil (61) and Venezuela (63) here because you read about their political issues in the news. These issues are at the root of poor government efficiency which diminishes their place in the rankings,” Professor Arturo Bris, Director of the IMD World Competitiveness Center, said in a statement.

BRAZIL: WILL TEMER STAY OR LEAVE?

Brazil’s president Michel Temer will leave office before his mandate ends in December 2018, experts say.

"President Temer is not likely to survive much longer in office,” Peter Hakim, president emeritus of the Inter-American Dialogue, told the Dialogue’s daily Latin America Advisor.

David Fleischer, emeritus professor at the University of Brasília and editor of Brazil Focus, agrees.

“There is a good chance (perhaps 80 percent) that the [Supreme Electoral Tribunal] might remove Temer,” he tells the Latin America Advisor.

What happens if Temer resigns is unclear, though. Congress could elect a new interim president or amend the constitution to move up elections.

Finance Minister Henrique Meirelles is a potential candidate, but the government coalition would prefer to maintain him at the Finance Ministry and keep him in reserve as a possible candidate in the 2018 presidential election, according to Fleischer.

“Ideally, the [new] president would also be able to advance some economic reform, even if less than ideal, that bolsters the confidence of an increasingly skeptical investment community,” Hakim says.

BRAZILIAN IMPORTERS MOST PROACTIVE

Brazilian importers are the most proactive in seeking new suppliers in the Americas, with only 5 percent indicating they do not contact new suppliers but rather wait to be contacted, according to the latest UPS Business Monitor Export Index Latin America (BMEI) report.

Importers in the U.S. were the least proactive, with one out of three (31 percent) indicating they do not contact suppliers.

The 2017 BMEI, a UPS study conducted in conjunction with the RGX Global Export Network, surveyed 2,170 importers from the industrial manufacturing, automotive, apparel and high-tech industries regarding the factors that influence their purchasing behavior about the products they buy. The nine countries included in the survey include:  Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Mexico, Panama, Peru and the United States.

In the apparel segment, exporters looking for new markets to develop should consider the U.S., Costa Rica and Chile. These countries had the highest percentage of respondents looking for new suppliers.

 

For the automotive sector, Colombia and Costa Rica have the highest percentage of importers looking for new suppliers.

 

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