Latin American Manufacturers Strong This Year and Next

Aug. 18, 2008
Manufacturers Alliance/MAPI report predicts 4.9% growth in 08, 4.4% in 09.

Focusing on Latin America's three largest economies -- Brazil, Argentina, and Mexico, which together are responsible for more than 80% of the region's manufacturing output, the Manufacturers Alliance/MAPI sees a strong finish to 2008 and continued growth in 2009.

MAPI raised its forecast for overall manufacturing output in Latin America in 2008 to 4.9% from its 3.8% forecast in the December 2007 report, slightly above the 4.6% expansion of 2007.

The forecast also indicates that production growth will ease to 4.4% in 2009, with deceleration in Brazil and Argentina, but slight improvement in Mexico.

Brazil's manufacturing production is expected to expand 6.8% in 2008 and is a key element in MAPI's higher forecast for the current year. The manufacturers of motor vehicles, other transport equipment, machinery and equipment, and electrical machinery and apparatus -- all expanding at double-digit rates -- are the most important contributors to output growth in Brazil.

Mexico is expected to increase a modest 2% and Argentina 7.5% in 2008, a deceleration from 9% in 2007.

"Rising inflation, coupled with currency appreciation, will slow Brazilian-based manufacturers; higher interest rates and weak U.S. demand will put a ceiling on Mexico's manufacturing activity; and Argentina's rising costs -- among other macroeconomic concerns -- will likely curb the strong expansion of the past five years," said Fernando Sedano, Ph.D., Manufacturers Alliance/MAPI Economic Consultant and author of the analysis.

Looking at specific industries, food and beverages, motor vehicles, and machinery and equipment, account for roughly 40% to 45% of the region's manufacturing.

Growth in the automotive sector is forecast at 10% in 2008 and 7.6% in 2009. The machinery and equipment industry should increase production 11% in 2008 and 9.7% in 2009 says MAPI.

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