Search

Peru is now regaining a fragile confidence, following a decade of economic collapse and violence. The recovery is due to the economic programme of president Albert Fujimori, which has boosted investor confidence. Fujimori's plans include privatisations and reform of labour laws. The economy has now begun to revive, but the government is faced with severe economic and social problems, and also a fight against terrorism. Peru's economy and politics are further discussed in a special report which looks at the stock exchange, the army, politics, mining, infrastructure, anti-drugs policy and links with Japan.

Pres Carlos Menem, the successor to the military in Argentina, has stabilised the economy by the convertability law, which links the peso to the US dollar. This has reduced inflation as it prevents the central bank from issuing new money unless backed by foreign exchange. Manem has also followed a privatisation policy. There is doubt, however, that these policies can be sustained, as export earnings have fallen creating a current account deficit. Other problems confronting the country are corruption and the need for improvements in education.

There is uncertainty over the future of the North American Free Trade Agreement, which involves Mexico, the US and Canada. The leadership has since changed in the US and the Canadian Prime Minister plans to resign. Supporters of the agreement claim the US will use environmental arguments and employment issues as an excuse to exercise its protectionist policies. Most agree that all three countries will benefit from the accord, but Mexico will profit the most and jobs may be lost in the US as companies relocate to Mexico to profit from cheaper labour.

Latin America has become popular for all investors. This is due to economic reforms which have produced growth and stability and that traditional markets are offering lower returns, making investors look elsewhere. The disadvantages of the Latin American stock market is that it is volatile, however, and an excess supply of bond issues sold poorly and caused investors to exercise more caution.

The government of Ecuador under Pres Sixto Duran Ballen was elected into office in August 1992, has experienced public opposition only four months into its term. This is a result of the economic situation in Ecuador. Annual inflation is 52%, 60% of people live in poverty, and per capita income has fallen 7.5%. It is introducing economic reforms to remmedy the problems which include privatisation, the reduction in the size of the public sector, reducing bureaucracy and attracting foreign investment.

President Carlos Salinas of Mexico has successfully implemented an economic reform programme, yet further deregulation is needed. There is no vision of what will replace the old economic and political system in Mexico and the Party of Democratic Revolution is pressing for political reform. Also of concern is the future of the North American Free Trade Agreement. The election of Bill Clinton as US President may mean that ammendments must be made.

Belize is more politically stable and economically prosperous than its other South American neighbours. This is due to the influence of Caribbeans which comprised a high proportion of the population. The proportion has diminished with the influx of 40,000 refugees from neighbouring countries and the emigration of the Afro-Caribbeans. Belize may be allowed entry to the organisation of American States if the veto placed by Guatemala is lifted. Guatemala placed the veto because of its claim to Belize territory. The dispute is neary fully resolved.

The 90's were predicted to be a decade of prosperity, yet political upheaval in parts of the world and recession has not permitted this. The disintegration of the Soviet Union, hunger and conflict in Africa and the recession in industrialised nations where unemployment has risen to 30 million has prevented world economic growth. Industrialised nations also face the constraints of environmental legislation, which is becoming more prolific.

The United Nations Conference on Environment and Development (Earth Summit) will have many problems to face. The atmosphere, land and forests, water supplies and bio-diversity are the main issues to be tackled. Population growth is a crucial issue. Conflicting views on protecting the environment between the industrialised nations and the Third World countries are likely. Environmental groups do not expect the conference to produce answers to environmental problems. UK Environment Minister, Michael Howard sees the Earth Summit as a unique opportunity.

Latin America benefitted from etimated capital infows of $40 billion in 1991, most of whch consisted of repatriated flight capital. The reasons for the increase, which is about three fold, are that recession in developed countries has made it less profitable for money to be held there and that Latin American countries have improved their economic policies. Instabilities in the respective Latin American countries still means, however, that foreign investors are taking a risk.

The Mexican economy is recovering more rapidly from financial crisis than had been forecast. Output dropped by 7% in 1995 but should grow by more than 3.5% in 1996 and could reach more than 4% in 1997. Rising petroleum prices have helped the government and high international liquidity has provided a favorable environment for issuing bonds. Exports have also risen and account for from 27% to 29% of gross domestic product in 1996 compared with 17% for 1st qtr 1994. Export growth has slowed. The government faces a difficult decision in balancing exports with inflation since a low value for the peso helps exports but not inflation.

Uruguayans are resisting the reform of their welfare state system, which has existed since 1903 and has given them the highest quality of life of any other South American country. Yet the system is a financial burden on the state and unsustainable. Pres Luis Alberto Lacalle plans to privatise some state enterprises but a privatisation referendum was rejected in Dec 1992.A smaller privatisation scheme, however, has passed through Congress.

The European Union will begin developing and evaluating proposals on regulating auditing firms, which may lead to the creation of a pan-European market supervisor to oversee the firms. Questions raised include whether auditors should anticipate future problems and serve regulators as well as investors.

The European Union has proposed two pieces of legislation aimed at giving the European Securities and Markets Authority broader power in regulating the financial services sector. One requires that most derivatives trades be done via centralized clearing houses; the other requires investors to provide more information regarding bets made against government debt or companies. The proposals enhance convergence with Hong Kong and U.S. financial regulations.

Economic recovery in Europe may be affected by banks' inability to raise funds to make long-term loans to businesses. Unlike U.S. corporations that rely mostly on capital markets for funding, most European businesses rely on bank credit.

Having sold 5 billion euro in 10-year bonds last week, Greece plans to issue one or two bonds in March to raise 10 billion euro in an attempt to narrow its massive budget deficit. The Greek government also plans to raise an additional 5 billion and 10 billion euro in a separate offering aimed at investors in the U.S. and Asia.

In interview, Google Inc.'s Chief Executive Eric Schmidt discusses his company's recent threat to withdraw from China because of government censorship and increasing cyber security threats.

The government of Venezuela under Pres Carlos Andres Perez is experiencing difficulties which include public unpopularity, army rebellions and differences of opinion with congress. The country has the longest record of democracy in South America, however, and the fastest growth rate, at 10.4% per year. The political instability is due to the abolition of the tools for political favouritism such as price exchange and import controls. The government is also short of money and is criticised by the press.

Despite improving its finances and boosting its Tier 1 capital ratio to 13.2%, UBS AG's second-quarter net loss widened to 1.4 billion Swiss francs from a net loss of 395 million francs a year earlier. UBS suffered outflows of 17.1 billion francs at its global asset-management business, 5.8 billion francs at its U.S. wealth-management unit, and 16.5 billion francs at its Swiss wealth-management division. By year's end, UBS expects the Swiss government to sell its 9.3% stake in the bank.

Because of a 1-billion-pounds-sterling pre-tax profit from its investment-banking division, Barclays PLC's first-half net profit rose 10% to 1.9 billion pounds, while HSBC Holdings PLC suffered a 57%-decline in net profit to $3.35 billion. Article discusses both banks' share value, funding, capital rating and expected earnings for the rest of 2009.

Under pressure from the government, Allied Irish Banks PLC has agreed to raise 1.5 billion euro in capital -partly through the sale of assets- in addition to the 3.5-billion-euro capital injection it received from the state in February. The government of Ireland had previously announced it would create a bank to buy as much as 90 million euro in bad assets from Allied Irish and four other banks.

UBS AG's chief executive, Oswald Grubel, says that his company expects to post a first-quarter net loss of nearly two billion Swiss francs. Mr. Gruber also announced plans to lay off 8,700 workers, and reduce operating costs by 15% amounting to between 3.5 billion francs and four billion francs in savings.

The twin scourges of piracy and maritime terrorism have filled thousands of newspaper column inches and hours of news broadcasts over the past decade. Small Boats, Weak States, Dirty Money [...]

Expectations The new head of the only superpower will face pressure to solve global problems, write FT regional experts Asia Asia does not often speak with one voice, but in [...]

Until a few months ago, as financial and economic turmoil gripped the industrialised world, Latin America was suffused with optimism that it would escape the worst. 'People ask me about [...]

The intertwining stories of Fidel Castro and Ernesto 'Che' Guevara have been told many times, mythologised and elaborated, but for those who do not know them, here they are in [...]

GENERAL INDUSTRIALS Shares in Cemex, the Mexican cement group, jumped sharply yesterday - pulling those of other cement companies higher in its wake - after the group said it had [...]

Extradition hearing in Thai court Viktor Bout dubbed 'merchant of death' A suspected Russian arms dealer appeared in a Thai court yesterday, shackled and wearing an orange prison jump suit, [...]

The World Bank expressed concern yesterday about a shift in Latin American electricity generation towards coal and natural gas, saying it might be a factor in turning a region with [...]

Economic prospects hit as credit flows slow Latin American countries face being 'crowded out' of global bond markets because of the huge US fiscal deficit, a group of prominent economists [...]

Financing Large volumes of US Treasury bonds issued as part of an effort to reverse an economic slump threaten to stop access to credit by Latin American governments facing financing [...]

Cross-border flows Foreign direct investment worldwide is expected to fall about 12-15 per cent next year from this year's record levels, according to the body set up to promote global [...]

Passive society link to lack of progress Study highlights 'unhappy paradox' Rapid economic growth makes people unhappy and many of Latin America's poorest are the most content with public services, [...]

News Analysis US files reveal risk of lost intelligence due to backlogs at secret 'Black Helix' programme, writes Stephen Fidler Valuable intelligence on thousands of suspected terrorists risks being lost [...]

Mexico's highly-centralised one-party political system has given way since the beginning of the decade to one that allows for true competition among parties. In the elections of 2000 and 2006, [...]

Officials admit that the country needs to become more competitive, writes Stephen Fidler For most of 2008, as the global financial crisis deepened, it seemed as if Mexico would escape [...]

ECONOMY Growth is still low for an emerging country, writes Stephen Fidler A financial and economic storm of the size of that striking Mexico in recent months would in the [...]

News Analysis Leaner times are ahead for lenders, write Stephen Fidler , Jonathan Wheatley and Adam Thomson Latin American economies are still paying the price for past home-grown banking crises. [...]

Argentina Argentine pension funds were yesterday preparing to liquidate their assets in Brazil, to comply with a government order to repatriate funds that could enable it to support the peso, [...]

Moves under way to repatriate shares Deals to begin after state takeover Argentine pension funds were yesterday preparing to liquidate their assets in Brazil, to comply with a government order [...]

Argentina Argentine pension funds were yesterday preparing to liquidate their assets in Brazil, to comply with a government order to repatriate funds that could enable it to support the peso, [...]

Argentina Argentine pension funds were yesterday preparing to liquidate their assets in Brazil, to comply with a government order to repatriate funds that could enable it to support the peso, [...]

Real Economies Investment projects worth billions of dollars are being cancelled or delayed across Latin America as financial turmoil in the industrialised world casts its long shadow over the real [...]

Real economies hit by turmoil Port and oilfield plans suffer delays Investment projects worth billions of dollars are being cancelled or delayed across Latin America as financial turmoil in the [...]

Mexico's central bank chief has accused investment banks of behaving irresponsibly and unethically in marketing derivative products to companies - warning that the problem extended far beyond Mexico. In recent [...]

Amid deepening international financial panic, the World Bank has slashed its 2009 growth forecasts for Latin America and expects several countries in the region to ask it for emergency cash [...]

Reaction As the crisis in the global financial system deepened, yesterday governments and investors took action in Asia, Latin America, Europe and in commodities markets. COMMODITIES Oil and commodities prices [...]

Contingency Draft The German government was drawing up a multi-billion contingency plan last night to shore up its banking system, which could see the state guarantee interbank lending in the [...]