Capital Flows to Latin America, 1998-2003(a) · Venezuela 11.1 12.9 11.6 13.1 13.7 15.1 0.61 526.17 21.36 Source: Euromonitor from industry sources/national statistics Domestic Electrical
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Table 1.7
Capital Flows to Latin America, 1998-2003(a)
(in billions of US dollars)
1998 1999 2000 2001 2002 2003
Net private capital flows 72.2 50.7 48.6 22.8 10.3 26.5
Net private direct investment 60.1 64.1 64.7 66.9 40.4 45.6
Net private portfolio investment 22.3 11.9 4.7 -2.2 1 7.6
Other net private capital flows -9.8 -26.3 -20.8 -41.9 -31.1 -26.7
Net official flows 16 1.5 -3.5 21.1 15.8 14.6
Change in reserves 8.4 7.9 -2.5 1.2 -3.3 -16.5
Source: IMFNote: (a) includes all countries in the region other than Cuba
Problems in obtaining external financing on the market during the first semester are reflected
in recent trends in international reserves. In 2002, the region’s reserve assets began to fall and
that decline is expected to accelerate in 2003. During the early months of 2002, significant
reductions in the reserves of Argentina, Brazil, and Venezuela were too large to be outweighed
by the increases posted in Chile, Colombia, Mexico and other countries around the region.
Latin America’s inflows of FDI fell abruptly in 2002 and will not recover significantly in 2003.
Inflows are projected to be only around $46 billion in 2003, far below the yearly average of
nearly US$ 73 billion received during the mid 1990s. The slump in FDI is partially accounted
for by the sharp reduction in purchases of existing assets. Some of the hardest-hit countries are
Argentina, Brazil and Mexico, which posted record levels of inflows in 1999 and 2000, thanks
mainly to large-scale corporate acquisitions in those countries.
1.5 International Trade and Trade Agreements
The weakening of international markets for Latin American exports, coupled with the effects
of the Argentine crisis, has had a significant impact on the performance of the external sector.
Table 1.8 shows long-term trends and projections for 2003. Latin America’s exports shrank by
2.8 percent in 2001 after steady growth in earlier years and an export boom in 2000. The
consequences of the recession are even more apparent in the case of imports where the
contraction will continue through 2002 (mainly due to conditions in Argentina). However,
both the value and volume of exports and imports are expected to recover in 2003 with rates of
growth in excess of long-term trends.
Table 1.8
Regional Trends in International Trade, 1984-2003(a)
(annual percentage change)
1984-1993 1994-2003 2000 2001 2002 2003
Value in U.S. dollars
Exports 4.8 8.4 19.4 -2.8 2.0 9.4
Imports 9.8 6.9 14.5 -1.1 -3.6 9.0
Volume
Exports 7.1 7.9 11.3 3.3 2.2 8.2
Imports 7.8 6.4 12.6 1.2 -4.2 8.0
Unit value in U.S. dollars
Exports 0.4 0.6 7.8 -6.0 -0.1 1.1
Imports 3.6 0.5 1.7 -2.3 0.4 0.9
Terms of trade -3.1 - 5.9 -3.7 -0.5 0.2
Source: IMFNote: (a) includes all countries in the region except Cuba
One of the major reasons for the poor performance of the external sector has been shifts in the
relative prices of traded goods. The unit value of these trade flows fell abruptly in 2001 and
Section One � Overview of Economic Prospects in Latin America Consumer Latin America 2003