During this economic slowdown, there’s an opportunity for Indian companies offering products with built-in intellectual property and compelling price/performance ratios especially in energy, pharma and specialty chemicals to enter the LatAm market. The Eximbank expanding lines of credit will also help. In a recessionary environment that promotes  cost-cutting, it is not surprising that the Chinese imports are slowly replacing US imports in some sectors.
Law.com –

The global financial crisis will hurt Latin America and the Caribbean Basin even if rich nations start to recover in 2010, according to an Inter-American Development Bank study presented last month at a meeting in Medellin, Colombia, of the bank’s 48 member countries.

The annual average output growth, a macroeconomic indicator measuring the total value of goods and services produced in the region’s seven biggest economies — Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela — could slow to 1.9 percent over the next four years if developed nations begin their economic recovery in the second half of the year. However, growth could slow to an annual average of only 0.1 percent in the next five years if recovery in the United States and Europe takes longer than expected.

The economies of the seven nations, which represent 91 percent of Latin American output, grew 5.8 percent between 2003 and 2007.

Despite the grim outlook, the Washington, D.C.-based IDB has some reason for optimism.

“Latin America and the Caribbean are much more prepared to face the impacts of the financial crisis because of their lower levels of debt, debt dollarization, smaller budget deficits and high level of international reserves,” said Santiago Levy, a vice president at the IDB. “But they will still suffer the effects. Depending on how rapidly growth in the rest of the world picks up, the collateral damage of the crisis could be felt years to come.”

“A strong dollar and a lack of available trade finance have hurt the competitiveness of U.S products. Exporters are cutting costs and are doing all they can to sell products to the south,” Hart and Lestingi wrote. “They are battling competition from low-cost countries like China. Import tariff increases in Mexico (in response to the NAFTA dispute) and Ecuador have already made some Latin American markets unreachable for U.S. producers and South Florida exporters.”

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Latin American Herald Tribune –

Economic growth in Latin America and the Caribbean will fall next year to 1.9 percent from its estimated level of 4.6 percent for 2008, the U.N. Economic Commission for Latin America and the Caribbean said Thursday

In its Preliminary Balance 2008, Santiago-based ECLAC – however – emphasized that 2008 has been the sixth consecutive year of growth for the region, a period during which the labor market indicators also improved and poverty fell.

Almost all the region’s countries gave priority to macroeconomic equilibrium and generated budget surpluses, Alicia Barcena, the ECLAC executive secretary, emphasized upon presenting the document. Barcena said that today the region is better prepared to confront the global economic slowdown, but it is certainly not immune to it.

Looking at individual countries, this year it was Uruguay that led the region’s growth with a rate of 11.5 percent, followed by Peru at 9.4 percent; Panama, 9.2 percent; Argentina, with growth of 6.8 percent; and Ecuador, 6.5 percent and Brazil at 5.9 percent.

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Latin Business Chronicle

[P]ost-mortem analysis, [after deleveraging driven by financial crisis] indicates that currencies in Latin America were over-inflated and the 30 percent downturn will likely settle at a 20-25 percent decline, proving to be a healthy correction that brings some much needed competitiveness back to the region’s export industries.

That analysis, however, is appropriately limited to the region’s key investment markets, namely Mexico, Brazil, Colombia, Chile and Peru, which capture most of the region’s inbound FDI. The difference between correction and devaluation is that, historically, Latin America experienced devaluations under conditions of high foreign debt and poor financial management that led to spiraling inflation and further devaluation. This time around, the big five markets mentioned above all share well-trained ministries of finance, record levels of foreign reserves, conservative levels of foreign debt, and a rapidly maturing political class that understands the need for fiscal prudence. The investment grade standing of the sovereign debt of these five countries is being put to the test and, thus far, is winning.

CORPORATES: ACHILLES HEEL

Where this financial crisis has revealed real weakness in Latin America is in the irrational exuberance of its rapidly growing and highly indebted corporate sector.

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