“China doesn’t make changes very quickly, so we think, yes, China will allow Mexico to gain more market share in the United States,’’ said Heath, who visited Miami for a Latin American Economic Forecast seminar hosted by the University of Miami’s Center for Hemispheric Policy.
There are other bright spots around the region.
Latin America’s unemployment rate is at a record low and more than one in three people in Latin American now are considered members of the middle-class. Some 58 million Latin Americans have moved above the poverty line to middle-class status in the past decade.
The economies of Colombia, Chile, Panama and Peru were the stars in 2012 and are expected to hold their own in 2013 although growth will slow somewhat.
It “may not be the great year we all want, but it will be a good year,’’ said Alvaro Moreno, a researcher at Colombia’s Private Board of Competiveness.
During the first few weeks of this year Colombia hit two milestones: It placed $1 billion in bonds on the international market at a record-low rate of 2.7 percent, and the market capitalization of state-run oil company Ecopetrol overtook Brazilian titan Petrobras to become Latin America’s largest listed company.
Not bad for a country that just a decade ago was being written off as a precarious narco-state trapped in a 50-year guerrilla war.
As Colombia has shed its dark past, foreign investment has poured into mining and oil exploration. The Andean nation is expected to see growth of about 4 percent this year — down slightly from 2012 levels and slower than some of its neighbors — but still solid.
But Colombia’s success has a price. The avalanche of investment dollars has strengthened the peso, making Colombian exports less competitive. In the last four years, the peso has appreciated 36 percent versus the dollar, increasing the cost of exports at a time when many Colombians are hoping to reap the benefits of a new free trade agreement with the United States.
“With the current exchange rate, it’s difficult for the agricultural sector, or any other commercial good, to get its head above water,” Minister of Agriculture and Rural Development Juan Camilo Restrepo complained last week.
The coffee industry is a case in point. Coffee is the country’s fourth largest export after crude, coal and precious metals, but it remains Colombia’s flagship product.
Even though Colombia’s coffee crop was larger, the value dropped 31 percent from 2011 to 2012, in part due to the strengthening peso.
“Our top public policy issue is the valuation of the peso,” said Luis Fernando Samper, head of communications at the National Coffee Federation.
The government announced last week it would increase its monthly purchase of dollars from $500 million to $750 million. By soaking up excess greenbacks, it hopes to increase the value of the dollar relative to the peso.
The currency crunch isn’t the only problem. The economy has been showing signs that it’s slowing as manufacturing and construction have dipped. “This de-acceleration will be a crucial theme for Colombia this year,” said Leonardo Santana, an economics professor at Jorge Tadeo Lozano University in Bogota.
Colombia also has one of Latin America’s highest unemployment rates, around 10 percent, and inferior roads and ports keep it from fully taking advantage of the free trade agreement, Santana said. “Infrastructure is our Achilles’ heel.”