FocusEconomics Insights - Latest Posts
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How vulnerable is Latin America to economic crises today?
October 18, 2017
Economic crises are part of Latin America’s collective unconscious. In the beginning of the 1980s, the exhaustion of the economic model based on industrialization led to the debt crisis that gave rise to what is known as the "lost decade". From then on, over the course of more than twenty years, crises affected most of the countries of the region at various points in time. This stage however, is now in the past. "Dictatorships have ceased to be the norm and in most of the region, government institutions have improved, there is more responsible economic policy in place, and better and stricter fiscal and monetary policies have been implemented," according to a study by Pablo Bejar, a researcher at the Inter-American Development Bank (IDB).
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Iron ore facts and common questions answered
October 17, 2017
Last year we began a series of posts in which we answer typical questions about the various commodities we cover with our Consensus Forecast commodities report. Last year we wrote posts on Brent and WTI crude oil as well as gold. This time out we will be covering iron ore, one of the most important yet underappreciated commodities. Keep checking back with us for more in our commodities explainer series.
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The bulging economic costs of obesity
October 16, 2017
It’s a Friday evening in Barcelona, and just as she has done for decades, Carmen Cano is making dinner. She prepares simple, rustic fare: chicken, rice and steamed vegetables. Unfortunately, this type of healthy-but-hearty dish is becoming ever more of a rarity here.
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How much investment is needed to salvage Latin America’s crumbling infrastructure?
October 11, 2017
The quality of infrastructure in Latin American countries compared to other regions of the world is only better than that of African countries and is not even half as good as that of developed countries. According to the Latin America Development Infrastructure (CAF) report, published in 2016, the infrastructure gap remains significant. Taking into consideration current trends, it is estimated that the region would have to work for two decades to reach the current level of infrastructure in the OECD countries.
Several studies recommend that in order to catch up, Latin American countries must invest around 5% of annual GDP. In recent years, investment in infrastructure has oscillated between just 2.4% and 3.2% of GDP. In order to address this situation, involving both the public and private sectors is essential.
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A Look at the Potential Impact of Brexit on the Dutch Economy
October 3, 2017
Written by Jan Lammersen, Economist
The effects of Brexit on both individual Eurozone countries and the area as a whole remain shrouded in uncertainty. While negotiations on the United Kingdom’s divorce from the European Union are still under way, Westminster has released several policy papers to date, none of which were found to be “satisfactory” by the president of the European Commission, Jean-Claude Juncker. Speaking at a conference of EU ambassadors in late August, Juncker commented:
“We need to be crystal clear that we will commence no negotiations on the new relationship—particularly a new economic and trade relationship—between the UK and the EU before all these questions are resolved.”
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England’s north-south divide: Is it still grim up north?
September 20, 2017
The Northern Powerhouse project has seen progress on several fronts, but striking inequalities remain
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The Icelandic economy and Game of Thrones: Just what the maester ordered
September 19, 2017
Iceland is known for its natural picturesque beauty, active volcanos, the northern lights and of course its friendly people. In fact, the country was recently named the friendliest country in the world by the World Economic Forum. However, the one black spot on the country’s nearly spotless record was the 2008 Icelandic banking crisis that left the country’s economy on the verge of complete collapse.
In 2008, all three of Iceland’s major privately owned commercial banks failed and the country’s stock market lost 80% of its value overnight. Brought on by the deregulation of banks in 2001, years of asset inflation and bad loans resulted in a national debt 10 times that of its GDP. The banks eventually defaulted resulting in the largest single banking collapse in world history.
With the economy teetering on the edge after the disaster, the government took emergency measures to get the economy back on its feet and stabilize the Icelandic krona. Nearly 10 years later Iceland has been called a European success story as its economy is now looking like a world beater. The country is on track to be the fastest growing economy among OECD member countries in 2017. And a lot of this is down to the recent boom in tourism and specifically, the hit HBO TV series, Game of Thrones.
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Tulip Mania: When Tulips Cost As Much As Houses
September 15, 2017
Cryptocurrencies and especially Bitcoin are the talk of the town of late. According to CNBC, the price of a single bitcoin "has gone up at a faster pace than any other speculative vehicle in market history, as investor enthusiasm for the new medium has reached a fever pitch."
Some have likened the Bitcoin craze to Tulip Mania, believing that the bubble is getting ready to burst. But what was Tulip Mania? Before we get into that, ask yourself this question: how much would you pay for a tulip? If you had lived in 17th century Holland, it may have cost you your entire home, and you probably still would have paid up.
Aside from the Bitcoin bubble, there have been a lot of economic bubbles and subsequent crashes over the years such as, the dot com bubble, the stock-market bubble, the real-estate bubble, but one you may have never heard of is the Tulip Bulb Market Bubble of 17th century Netherlands.
As any market trader will tell you, trading involves substantial risk of loss and is not suitable for everyone. Tulip mania is a perfect example of a cautionary tale of price speculation in what is widely regarded as the first recorded financial bubble and crash of all time.
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Emerging Markets Are Kicking Into Higher Gear In 2017
August 28, 2017
With emerging market economies looking as though they are coming out of their slump, we've got a new emerging markets outlook and infographic for you in this post. You can also get a free Emerging Markets report download here.
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Why is foreign direct investment in Latin America falling again?
August 23, 2017
Foreign direct investment (FDI) to Latin America and the Caribbean will drop 5% this year following the 7.9% drop in 2016 over the previous year, according to a new report from the Economic Commission for Latin America and the Caribbean (ECLAC). Although Latin America received 10% of global FDI in 2016—quite high compared to other regions—the amount was actually lower compared to the 2011–2014 period, when it received 14% of all foreign investment.
This fall in investment in the region is due to three fundamental factors. The decline in raw material prices has impacted investments directed toward the natural resources sector; several economies in the region have seen a slowdown; and "technological sophistication and expansion of the digital economy that tends towards a concentration of transnational investments in developed economies," is also having an impact, according to the annual report on Foreign Direct Investment in Latin America and the Caribbean.
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