Latin American Trade Roundup July
As specialist logistics service providers to and from the region, Envío have summarised a few recent items of Latin American trade news below.
Bolivia – Using the Yuan
Bolivia is the latest Latin American country to be using the Chinese Yuan to pay for its imports and exports, which is becoming a growing challenge to the US Dollar. While the amount being used is still relatively small, it is increasing, and Bolivia has now joined other South American countries using the currency, including Brazil and Argentina. China’s footprint in Latin America is increasing, following significant investment in trade.
Brazil – Car Deal & Interest Rates
Chinese car manufacturer BYD is set to spend $600m on a new Brazilian facility to build electric and hybrid cars, buses and trucks. The Shenzhen-headquartered company announced plans to build the industrial complex in the northeastern state of Bahia, which is now suggested to be Brazil’s centre of innovation and high technology. The venture is expected to generate more than 5,000 much needed jobs, since western car companies like Ford and Mercedes-Benz decided to leave Brazil in recent years.
Meanwhile, Brazil’s Finance Minister has said this week that he expects the basic interest rate to fall to “at least” 12% by the end of the year. The central bank has previously ignored pressure from the government and maintained its benchmark interest rate at 13.75% since last September. However, it has recently signaled that many of its policy makers see room for a small rate cut at next week’s meeting.
Chile – Interest Rate Cut
Chile is also expected to cut its benchmark interest rate later today by at least 75 points after holding it steady at 11.25% for the past nine months. Inflation in Chile, which saw one of the region’s biggest post-COVID price spikes, has dropped to 7.6% from a high of 14% last August. Chile and most major Latin American economies hit decades-high inflation last year, leading to aggressive monetary tightening that might finally be reversing as price hikes have slowed across the region.
Panama – Canal Drought Restrictions Continue
The Panama Canal will extend its restrictions on ships’ maximum depth, and has limited average crossings at one of the world’s busiest trade passages to just 32 ships a day, while the prolonged drought continues. The maximum sustainable capacity of the Panama Canal, including both the Panamax and expanded neo-panamax locks, is approximately 40 vessels per day.