Professional Documents
Culture Documents
JUNE 2014
BRAZILS BOTCHED
DELIVERY
Our detailed research points to chronic delays
and cost overruns
CONSUMER: DEBT RESOURCES:
DIFFICULTIES
NEW FARMING
FRONTIERS
PDF distributed to richard.lapper@ft.com
FINANCE:
INFRASTRUCTURE:
PRIVATE EQUITY OLYMPIC
LOOKS TO MEXICO CONCERNS RISE
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JUNE 2014
3.0 RESOURCES AND TRADE
16
IN THIS REPORT:
1.0 MACRO VIEW
13
Of the 32 private equity
managers expressed
interest in Colombia
2.0 CONSUMER
80.4%
Of Peruvians
save money*
90.4%
4.0 FINANCE
5.0 INFRASTRUCTURE
s s
16.6%
Of Chileans have
property insurance*
Of Brazilians have
a bank account*
24.9%
Of Argentines find it very
difficult to service their
debts*
*Based on a survey of 1,500 respondents in Brazil and 1,000 in each of the other countries
Source: LatAm Confidential
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JUNE 2014
1.0
MACRO VIEW
Brazil World Cup failures are likely
to make the government even less
popular but we do not envisage any serious
political upheaval and still expect the
incumbent president to win
re-election
In March 2011, when we first researched Brazils execution of its World Cup spending
commitments, we found that too little has been spent and too little built, warned
against the dangers of complacency, and awarded the country a yellow card (LC Mar
31 2011, Infrastructure). Three years on, it is clear that these warnings have not been
heeded. As our research in this report shows, Brazil has underachieved, missing an
opportunity to catalyse the development of the much-needed transport infrastructure. A
fifth of the planned public transport schemes have not been built and others will be only
partially operational during the event. The vast majority of planned airport upgrades are
unfinished. Overall investment in World Cup related projects has increased by only R$1bn
($450m) to R$26.4bn since the first plans were announced in 2010, but public transport has
ended up with about half the funds that were intended for it, with chronic cost overruns on
stadiums and airports absorbing the lions share of funding (see chart 1).
The performance of some host cities has been shambolic. R$525m was budgeted for
urban transport improvements in the city of Porto Alegre but only R$16m has actually been
spent. Many of the projects are of limited use. None of the new BRT (bus rapid transport)
schemes operating in Belo Horizonte, for example, will connect to the airport and the
project focused on the centre of the city will not be fully operational in time for the World
Cup. Poor planning, complicated tendering processes, and difficulties surrounding land
expropriation have all played their part in slowing down projects. Wage pressures have
added to construction costs, contributing to overruns. We believe that all these factors will
continue to hinder the pace of infrastructure development once the tournament is over. It is
also possible that frustrations linked to urban transport will feed into the rumbling low
Investment
50
12
10
8
30
R$bn
No. of projects
40
50
20
40
10
0
11.6
6.2
Planned
Actual*
Planned
Actual*
1.1
JUNE 2014
MACRO VIEW
BRAZILS LOST
OPPORTUNITY
level strikes and anti-government protests that have been surfacing again in many Brazilian
cities in recent weeks.
However, we regard this as simply another lost opportunity rather than presaging any
broader political upheaval. Emergency security and logistic arrangements mean that the
tournament will very probably take place this month in reasonable order and without
any major mishap. Although economic confidence is at a low level (LC Mar 20 2014,
Consumer Survey) and the popularity of President Dilma Rousseff has been falling in
recent months (Update Alert, May 22 2014; Update Alert, Apr 7 2014), we still believe
that Ms Rousseff is the most likely winner of this years election, albeit after a much more
competitive second round than seemed likely a few months ago. Growth this year will be
less than 2%, but low unemployment, recent rises in the minimum wage and increases
in social benefits all favour poorer Brazilians and make them more likely to vote for Ms
Rousseff. In the longer term, in spite of all the disappointments, the slow urban transport
infrastructure build-up will continue to generate some opportunities for suppliers.
MEXICAN FRUSTRATION
Mexico too has been a frustrating market for investors. The countrys 1Q14 GDP growth
of only 1.8% compared to the same period of last year, led the government to revise down
its full year forecast to 2.7% from 3.9%. This dismal result reflects the continued weakness
of consumer spending, which we have highlighted previously. Our survey in this report
of consumer debt suggests that growing numbers of Mexicans are having difficulty
making debt payments, a result which could reflect the countrys relatively high levels
of informality and possible dependency on expensive informal credit markets (see chart
2). More positively, there are signs that in spite of delays Mexico is pressing ahead with
its energy reform (Update Alert, May 28 2014). Following internal elections in the centreright opposition National Action party, and the approval of electoral reforms including
the creation of a national electoral institute with greater authority at the state level a
majority of legislators seem to be ready to approve before the end of next month the
secondary legislation needed to make energy reform a reality.
PRIVATE OPPORTUNITIES
The other two pieces of research in the report focus on private equity and other alternative
investment opportunities. In what we intend to be an annual survey of private equity
prospects, we surveyed 32 private equity and venture capital fund managers and found
them to be relatively buoyant about prospects, in spite of recent challenges to fund raising
plans. Although 19 of the managers said the economic downturn in the region had had
Mexico
80
70
60
50
% 40
30
76.3
64.0
59.0
46.9
20
10
0
1.2
JUNE 2014
MACRO VIEW
BRAZILS LOST
OPPORTUNITY
either a significant or moderate negative impact, 23 of the sample were more optimistic
about Latin Americas prospects over the next 12 months (see chart 3). Ten managers said
they planned to increase investments in Mexico, six in Peru and four in Colombia, with a
number making their first forays into the Pacific Alliance markets. We were not surprised
by this interest in the Andes. Peru, whose economy is expected to grow by 5.3% this year,
has consistently shown up as the strongest of the six countries covered in our Consumer
Survey. Colombia, which is also expected to do reasonably well this year with projected
expansion of 4.6%, has been the second strongest performer in our surveys (LC Mar 20
2014, Consumer Survey).
From a sector point of view, our interviewees were particularly interested in
healthcare, with retail, education, energy and utilities, logistics, and oil and gas also
attracting significant interest. As we pointed out in our last report (LC Apr 17 2014,
Consumer), private healthcare has grown substantially in Latin America over the
past decade. Private equity houses played a significant part in bringing listed Brazilian
companies, such as Qualicorp (QUAL3:SAO), to the market.
Our final piece of research looks at the emergence of agribusiness opportunities in
two small but relatively open Southern Cone markets, Uruguay and Paraguay. Uruguayan
agriculture has changed radically in the last two decades, with its once dominant beef
industry now overshadowed by soyabeans production and forestry. Local groups, such as
the Montevideo-listed Union Agriculture Group, are playing an important role in driving
this trend. Paraguays soyabean industry is long established in the east of the country, but
under President Horacio Cartes, elected last year, the government is seeking to develop the
sparsely populated Paraguayan Chaco region in the north-west.
No. of respondents
20
15
23
10
5
0
More optimistic
Less optimistic
The same
Pessimstic
Principal Richard Lapper Senior Researchers Amy Stillman, Luke McLeod-Roberts Researchers Cecilia Lanata Briones,
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JUNE 2014
2.0
CONSUMER
Our quarterly Consumer Survey has shown that growing numbers of Latin Americans
are facing difficulties in meeting debt payments. A relatively large numbers of our
Brazilian respondents are still increasing their use of consumer credit, however.
We found that Argentines and Mexicans made less use of the formal financial system
than other Latin Americans.
onsumer spending has been an important driver of Latin American growth for the last
decade. However, family budgets have come under growing strain and the burden of
indebtedness has been rising. We examined these dynamics in greater detail in our
survey of consumers in Argentina, Brazil, Chile, Colombia, Mexico and Peru, assessing
the extent to which respondents have experienced growing difficulty in servicing their
debts. Some of these dynamics are complicated because many poorer Latin Americans are
only starting to use the formal banking and financial system. In our most recent Consumer
Survey conducted between February 13 and March 10 we therefore asked our respondents
about how they used their bank accounts and the extent to which they borrowed money
either through mortgage or consumer loans, or through credit cards. We also surveyed them
about their insurance use.
4Q13
1Q14
60
50
40
% 30
20
10
0
LatAm
Argentina
Brazil
Chile
Colombia
Mexico
Peru
2.1
JUNE 2014
CONSUMER
THE SHADOW OF
DEBT LENGTHENS
ACUTE DIFFICULTIES IN
ARGENTINA AND MEXICO
% of respondents who find it very difficult for
their households to pay its debts
LatAm
3Q13
10.5%
12.6%
12.5%
4Q13
12.7%
20.7%
15.6%
1Q14
13.6%
24.9%
18.7%
Argentina
Mexico
Latin America as a whole was slightly higher than for Brazil, however. In our survey of 1,500
Brazilians, 43.4% of respondents in 1Q14 said it was difficult for their household to pay its
debts, up from 40.2% in 3Q13 and 41.3% in 4Q13 (see chart 1).
Our data suggests that Argentines and Mexicans suffered much greater difficulties over
the same period. 57.1% of Argentines and 53% of Mexican respondents said they experienced
difficulty in paying debt in 1Q14, compared to 38.7% and 42.9% respectively in 3Q13. Chilean
families were also in slightly greater trouble than their Brazilian counterparts.
Moreover, while only about 10% of our Brazilian respondents said they found it very
difficult to pay debts, the number of Argentines facing more acute problems increased
from 12.6% in 3Q13 to 24.9% in 1Q14. Similarly, 18.7% of our Mexican sample said it was very
difficult to service their financial commitments in 1Q14, up from 12.5% in 3Q13.
Although fewer Brazilians report difficulties in paying debts than Argentines, we are
concerned that these difficulties could be growing. Our survey indicates that a larger number
of Brazilians is increasing their use of credit than elsewhere in the region. In 1Q14, 44.8%
of Brazilians increased their use of credit, compared to an average of 40.4% for LatAm as a
whole (see chart 2).
The rise in the perceived difficulty of Argentine and Mexican families is puzzling. Mexican
base rates are lower and bank spreads narrower than in Brazil, and the market for payroll
loans less evolved. Argentinas high inflation rate makes family budgeting complex, but
theoretically at least it should erode the value of local currency debt and make it less, rather
than more, of a problem.
One possible explanation for this is the very sharp economic slowdown in both countries
during 1H13 and the first few months of 2014. We have repeatedly noted the depth of the
malaise affecting consumer sentiment in Mexico. Argentinas economy has been especially
adversely affected by the decline in commodity prices. Our survey data shows consumer
sentiment in both countries has consistently been weaker than in any of the other four
markets that we survey (LC Mar 20 2014, Consumer Survey). In addition, however, we
suspect many of our Mexican and Argentine respondents are more dependent than their
counterparts elsewhere on informal markets than on formal bank or mortgage credit.
Only 48.9% of Argentines and 64% of Mexicans participating in our survey had bank
accounts, a lower rate of bancarisation than the average 76.3% for the six countries as a whole
(see chart 3). Mexicans made less use of credit cards. 53% of our sample did not have a credit
card and of those that did 63% had only one card (see chart 4). For the region as a whole,
47.6% of those with cards had one card. Mexicans were also more dependent on cash. 78.7%
of our sample used cash to pay utility bills, a higher percentage than in any other market
100
Unchanged
Decreased
I don't know
80
60
%
40
20
0
LatAm
Brazil
3Q13
LatAm
Brazil
4Q13
LatAm
Brazil
1Q14
2.2
JUNE 2014
CONSUMER
THE SHADOW OF
DEBT LENGTHENS
apart from Colombia. In addition, we found that far fewer Mexicans bought property or
house contents insurance than the Latin American average. 2.6% of Mexicans had contents
insurance compared to a 5% average for the region. 4.5% of our Mexican sample had bought
property insurance compared to an average of 10.8% for the region as a whole (see chart 5).
MORTGAGE FINANCE
The great bulk of consumer borrowing in Latin America finances the purchase of consumer
durables rather than houses. Outside Chile where mortgage lending amounts to about
20% of GDP mortgage finance remains underdeveloped (see chart 6). This implies that
Latin Americans are less able to build up assets than their equivalents in other emerging
9.6
23.7
% of respondents
80
29.3
22.4
36.0
29.5
51.7
60
40
70.7
77.6
64.0
70.5
48.3
20
LatAm
Argentina
90.4
76.3
Brazil
Chile
Colombia
Mexico
Peru
100
% of respondents
80
41.0
42.7
59.0
57.3
LatAm
Argentina
32.8
37.3
35.9
48.7
53.1
51.3
46.9
Colombia
Mexico
60
40
67.2
62.7
20
Brazil
Chile
Peru
No. of cards
64.1
4 or more
2.3
JUNE 2014
CONSUMER
64.2%
Of Chileans who owned their homes
had borrowed money from a bank to
make the acquisition
THE SHADOW OF
DEBT LENGTHENS
markets where mortgage finance is more developed. It also means that the financial
implications of any debt bubble are less damaging. In our sample, about a third of our
respondents owned their houses and a third of those borrowed money from banks or
developers in order to buy.
Predictably, Chile was an outlier. 64.2% of those who owned their homes had borrowed
money from a bank to make the acquisition. Official figures show a steady rise in mortgage
finance over the last decade in the region, with the increase particularly strong in Brazil,
where the Minha Casa Minha Vida housing programme has made subsidised finance available
to low-income families. In 2013, mortgage debt accounted for 7.1% of GDP in Brazil (up from
1.6% in 2007) and 9.6% in Mexico (up from 7.3% in 2004). It is also growing very quickly in
Peru, reaching 5.4% in 2013, up from 1.9% in 2004.
Our survey suggests that a substantial number of Latin Americans still choose to build
their houses piecemeal, buying materials when they are able to afford them and adding
rooms whenever possible. 20.9% of our sample said they had bought their houses and built
through time, with that share rising to 23.9% in Brazil and over 30% in Peru (see chart 7).
20
15
% 10
16.6
16.3
5
13.1
10.8
9.8
8.8
5.0
0
LatAm
6.0
4.1
Argentina
Brazil
Chile
11.3
9.4
Colombia
4.5
9.9
2.6
Mexico
Peru
Brazil
Chile
Colombia
Mexico
Peru
20
15
% 10
2008
2009
2010
2011
2012
2013
JUNE 2014
2.4
CONSUMER
63.1%
44.8%
ARGENTINA
BRAZIL
CHILE
COLOMBIA
64.3%
57.1%
69.1%
THE SHADOW OF
DEBT LENGTHENS
Our data suggests that the consumer spending, which has been one of the main drivers of
the countrys expansion, remains relatively strong and fairly unencumbered by any debt
overhang. Our Peruvian respondents said they were making less use of credit in 1Q14 than
in either 3Q13 or 4Q13. However, in 1Q14 only 24.4% of Peruvians experienced difficulty in
paying their debts, the same as in 3Q13 and slightly higher than the 23.8% in 4Q13, but a
lower percentage than from any of the other five countries surveyed.
We also found that Peruvians were more likely to save than fellow Latin Americans.
On average, 63.1% of Latin Americans save, nearly half by building up current or deposit
accounts. However, 80.4% of our Peruvian sample said they saved money. Our Peruvian
respondents showed a higher than average propensity to hold savings in foreign currency
(almost certainly US dollars), land, cars or property bought for rent (see chart 8). The
conclusion reinforces our sense gained from previous surveys that Peruvians tend to be
more focused on their families future security and well-being than their counterparts
elsewhere. We have noted more than once before that Peruvians attach greater importance
to spending on education, healthcare and housing (LC Apr 17 2014, Consumer; LC 23 Jan
2014, Consumer).
We also detected signs of relatively rapid financial formalisation by Peruvians. 13.1% of our
sample had opened a bank account within the last six months, 27.9% within the last year and
42.1% within the last two years. These were all notably higher percentages than in the other
five markets.
MEXICO
PERU
30
61.3%
25
20
80.4%
30.4
15
10
20.9
23.9
20.4
19.8
5
0
LatAm
Argentina
Brazil
9.2
8.9
Chile
Colombia
Mexico
Peru
Peru
In a bank account
(savings/current account)
In a special savings account
I treasure domestic currency
I buy foreign currency
I buy properties to rent
I buy land
0
10
15
20
% of respondents
25
30
35
JUNE 2014
3.0
We visited both countries during April and May in order to assess local agribusiness
trends. We found that consolidation in Uruguay, prompted in part by the withdrawal
of stretched Argentine investors, has created opportunities for a number of local
groups. Some are beginning to expand into Paraguay, where the government is
seeking to open up swathes of uncultivated land and is planning extensive investment
in infrastructure that should, in the longer term, make the country more attractive to
international business.
ruguay began its push into forestry in the late 1980s. With 1m hectares (ha) of
timberland, now boasts a sizeable paper and pulp industry, with revenues from wood,
chips and pulp and paper generating about 10% of total incomes. The drive into
soyabeans came in the late 1990s, with farmers beginning to convert large quantities
of relatively cheap pastoral land along the Uruguay River. In the early 2000s, Argentine
agricultural companies such as Grupo Los Grobo made investments in cheaper tracts
of arable land along Uruguays west coast. Grown on just 12,000 ha in 2000, soyabeans
covered 1.5m ha by 2013. Output has increased at an even faster pace, rising from 27,600
tonnes in the 2000/01 harvest to an estimated 3.67m tonnes by the end of the current
harvest (see chart 1). Soyabeans generated 19% of Uruguays total export revenue in 2013.
Reflecting this development, land prices in Uruguay have increased sevenfold over the last
two decades, rising from an average of less than $500/ha in 1996 to more than $3,500/ha
1,500
2.5
1,200
2.0
900
1.5
600
1.0
300
0.5
2000/
2001
2001/
2002
2002/
2003
2003/
2004
2004/
2005
2005/
2006
2006/
2007
2007/
2008
2008/
2009
2009/
2010
2010/
2011
2011/
2012
2012/ 2013/
2013 2014E
Tonnes (m)
Hectares (000s)
0.0
3.1
JUNE 2014
RESOURCES
AND TRADE
$170m
Amount
for which
Argentinas El Tejar sold out its
Uruguayan interests to UAG in
February, giving it control over
67,000 additional ha of land in
Uruguay
Brazil
Uruguay
10
8
$000s
6
4
2
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012* 2013**
YoY change
Argentina
Brazil
Uruguay
60
50
40
30
%
20
10
0
-10
-20
-30
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
*Argentinas 2012-2013 prices are for the Province of Buenos Aires. Brazils 2012 price is for 1H12, **Brazils 2013 price is an estimate
Sources: DIEA, FGF-IBRE, Fischer & Schickendant , IGP-DI, OPYPA (Oficina de Programacin y Poltica Agropecuaria), World Bank
JUNE 2014
3.2
RESOURCES
AND TRADE
Adecoagro is another
investor to have exited
recently, selling two of the
three farms it initially bought
in Uruguay
productive farmland in South America, is another investor to have exited recently, selling
two of the three farms it initially bought in Uruguay. New Zealand Farming Systems, the
South American dairy unit of Singapore-based Olam International (O32:SES), has also
made several sales within their Uruguay land portfolio. In April, the company sold 7,771 ha
to local interests for $53.7m. Since 2010, it had bought more than 28,000 ha of land in the
states of Florida, Rio Negro and Rocha.
As well as UAG, we have identified eight other local participants who have begun to
engage in large-scale intensive agriculture. These groups are adding value to land by
increasing productivity on existing farms, or by converting uncultivated pastoral land to
produce a variety of crops including wheat, maize, and rice, as well as soyabeans. Some
are majority owners of the land they cultivate and closely allied with international players.
Others use a leasing model, where they rent land from smaller producers and sell on what
is cultivated to national and international trading groups for export. Today theres a
TREINTA Y TRES
(4, 7, 8, 11, 15, 19)
SORIANO
(2, 4, 7, 12-14, 17, 18)
LAVALLEJA
(7, 14-17)
ROCHA
(7, 8, 9, 14-16)
CANELONES (3)
MONTEVIDEO
Agriculture
Dairy
Corn
Grains
Forestry
Soyabeans
Wheat
Meat
Rice
Olives
MAP NO.
SALTO (11)
NAME
Adecoagro
Brazilian
Agronegocios
del Plata*
Uruguayan/
Argentine
100
AGRA
Uruguayan
20
Barraca Jorge
Walter Erro
Uruguayan
94
Calix Agro
French
11
Ernesto Correa
Brazilian**
100
Fadisol
Uruguayan
83
Forestal Atlntico
Sur
Chilean
45
Galpern Group
Uruguayan
15
10
US
18
11
GMO Renewable
Resources
Hillock Capital
Management
Argentine
20
12
Kilafen
Uruguayan
30
13
International
14
15
NZ Farming
Systems
RMK Timberland
Group
16
NATIONALITY
45
250
Singapore
20
US
38
Sieraas Calmas^
Spanish
30
17
Union Agricultural
Group
Uruguayan
181
18
UPM
Finnish
200
19
Weyerhaeuser
US
138
Global Forrest
Partners^^
Manuel Santos
Uribelarrea
US
140
HECTARES
(000S)
Argentine
55
*Part of Los Grobo, Argentina. **Businessman (single investor). ^Part of Ense. ^^Includes Forestal El Arriero (26,000 hectares), Forestal Oro Verde (50,000), Forestal Tekoayhu (50,000), Forestal Tierra Verde (14,000 )
Sources: Company websites, Uruguay Ministry of Agricluture, El Observador
3.3
JUNE 2014
RESOURCES
AND TRADE
85%
Of UAGs land is dedicated to crop
cultivation, but the group also
manages livestock and dairy units
UAG
Starting with a small blueberry farm in the west of Uruguay, UAGs land portfolio has
multiplied from a modest 8,000 ha to the 181,000 ha they currently hold after the El Tejar
takeover, 31,000 ha of which is leased. UAG was founded in 2007 by Montevideo-born
Juan Sartori, now executive chairman, who, having worked in the financial sector in
Europe, returned to his home country to focus on buying enough land to acquire the scale
needed to achieve efficiencies in the agriculture sector. 85% of UAGs land is dedicated
to crop cultivation, but the group also manages livestock and dairy units, selling to food
companies such as Conaprole, Marfrig (MRFG3:SAO), and Saman, mostly for the export
market. In May last year, the company listed on the Uruguayan stock exchange for $420m.
UAGs main priority is integrating the land they have acquired in order to boost
productivity. Weve had five years of very rapid growth, now is the time to consolidate what
we own, said Romualdo Varela, the chief executive, in an interview with LatAm Confidential.
Although positive about Paraguay, there are no solid plans to move into that market yet. The
Uruguayan company for now is sticking to what it knows the local market.
ADP
Agronegocios del Plata (better known by its acronym ADP) was established by the Guigou
family in 2002. Unlike UAG, the group uses a leasing model, cultivating 75,000 ha of land,
50,000 of which it leases from roughly 100 different smaller producers. The reason why
cultivation size varies is because some of the farms produce two crops in a single year,
rotating between wheat in the South American winter and soyabeans in summer. 43,000
ha were dedicated to soyabeans during the most recent harvest, 58% of their land portfolio.
Since 2004, ADP has partnered with the Grobocopatel family, now Grupo Los Grobo, a firm
based in Argentina and run by Gustavo Grobocopatel, known locally as The King of Soya.
Los Grobo is the majority shareholder of ADP and also adopts a leasing model across the
rest of the Mercosur region. The company does not own a single shovel or acre, instead it
leases machinery and land from others. Its focus today is on increasing the productivity
of existing farms rather than buying or leasing more land. Economic viability is about
large scale cultivation of soyabeans, said Marcos Guigou, ADPs president, in an interview
with El Pas, the Uruguayan daily newspaper. This year ADP will produce 200,000 tonnes of
soyabeans for export.
BARRACA ERRO
Barraca Jorge Walter Erro, is the third largest exporter of grains in Uruguay after Cargill
and Cereoil Uruguay. It introduced soyabeans to Uruguay in 2001. It produced 14.5% of
Uruguays overall grain exports in 2013. The company which was set up to transport
grains in the late 1940s also operates as Villa Trigo. Like ADP it has focused on increasing
productivity on existing land, partly through the development of new seed varieties. It
has an agreement with Donmario Seeds of Argentina, which specialises in genetically
modified varieties. In the early 2000s, it cooperated with ADP on some projects, but
now works separately, cultivating its own land and partnering with local farmers and
cooperatives. Barraca Erro is present in 18 of Uruguays 19 states, across 94,000 ha.
3.4
JUNE 2014
RESOURCES
AND TRADE
1.8
-3.9
1970- 1980- 1990- 20001979 1989 1999 2009
Sources: DIEA, OPYPA, World Bank
GOVERNMENT POLICY
Government policies have been generally supportive, although there is some frustration
about the poor quality of infrastructure and the slow pace of improvement. On the plus
side, Uruguays fiscal and legal framework is more transparent and predictable than that of
Argentina and Brazil. There is a flat 25% income tax, and tax breaks on farm machinery and
supplies. No sales tax is levied on farm products with the exception of a 1% municipal sales
tax on livestock. For smaller farms with annual revenues of less than $238,000, tax is capped
at $5,125 per year. In addition, government agricultural policies are arguably conducive to
sustainable development. In particular, the government has been keen to promote measures
limiting over farming: a soil protection plan has been introduced since 2010 1.5m ha
are currently protected and crop rotation became mandatory in 2013. Uruguays official
agricultural research unit, Inia, established in 1914, is considered a global innovator in
developing new seed varieties and conservation techniques. The government is also keen
to ensure agribusiness complies with food sanitation laws, allowing the industry less
complicated access to overseas markets. However, Uruguays transport network is seriously
deficient and agribusinesses complain that energy costs are expensive. Although logistics
are easier than in Argentina, Brazil and Paraguay, farmers criticise that it still typically
takes 30 days between harvesting and loading grain on ships. Marcos Guigou told a recent
interviewer that energy and transport costs in Uruguay are among the highest in the world.
Infrastructure problems are an obstacle.
Ports are a priority: plans are afoot to bring into operation two new deep sea ports at La
Coronilla, in Rocha state, and at Fray Bentos in the west of the country, supplementing three
existing facilities at Colonia, Montevideo and Nueva Palmira. But according to the ministry
of transport, the port of Rocha will not be fully operational in 2025. Railways have suffered
from decades of underinvestment. Over half of the countrys rail system has been abandoned
since nationalisation in 1952. And roads are heavily congested. A project to revive nearly
1,500 km of railway is in place, but progress has been sluggish. A $74.8m contract for Focem
Uno, linking Montevideo with Rivera near the Brazilian border, was awarded to the National
Railway Corporation (CFU) in November 2011, but relatively little has so far been done. The
winner of a second project, Focem Dos, to rebuild the west coast railway line that runs from
Fray Bentos to Salto Grande in Argentina, will be announced in July this year. Carlos Len,
head of infrastructure for the national railway association (AFE) told LatAm Confidential
that the China Railway Construction Corporation is a potential bidder. Progress has been
equally slow in improving Uruguays network of navigable rivers, although ministers claim
that investments have been made. Given these failures, Fadisol plans to build a port terminal
on the Tacuar River that borders Brazil, in the eastern state of Cerro Largo.
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3.5
JUNE 2014
RESOURCES
AND TRADE
3.6
JUNE 2014
RESOURCES
AND TRADE
1
2
Tima
n
Mo
nte
Lin
2 3
FILADELFIA
Aqidaban
do
CHACO
CLIMATE
Mainly cattle
AGRO PROODUCTION
Mainly Uruguayan and
Paraguayan producers
WHICH AGRO
PRODUCERS
ARE BASED THERE?
AGRO PROODUCTION
EAST
Evenly distributed
rainfall, average
annual rainfall
1,500mm compared
to 800mm in the
Chaco
Soybean, rice,
corn, wheat
97% of total
Apa
Ypan
EAST
More rainfall, about
1mm/km travelling
east. Fertile border
with Brazil
Jejui-Guazu
Parag
WEST
CLIMATE
SHARE OF
POPULATION
3% of total
1
Verde
PARAGUAY
uay
Chaco east
Project: Route 3,
connection with route 5
Type: Road refurbishment
Bidding date: 2014
WEST
Chaco west
ASUNCIN
Tebicuary
Paran
Cattle, exploring
soyabean and organic
sugar cultivation in
the north
Uruguayans and
internationals
exploring
JUNE 2014
4.0
FINANCE
14
Mexico and Peru are seeing increased private equity activity, while Colombia is
attracting interest in oil and gas. This year US buyout firms KKR & Co and Bain Capital
invested in Brazil for the first time.
o far 2014 has been a challenging year for private equity funds in Latin America.
Volatility across some of the regions biggest markets has hurt fundraising, with
international investors taking a more cautious approach to emerging markets. Big
buyout firms in the region are entering a new cycle of capital raising, but we estimate
that funds will not surpass $9bn this year, and could be lower. This would be higher than in
2013 when $5.5bn was raised, but lower than the 2011 fundraising peak when volumes reached
$10.3bn (see chart 1).
Our assessment is based on interviews with 32 private equity and venture capital fund
managers, conducted between March 25 and April 30. Among this number were ten
international funds, 11 funds headquartered in Brazil, eight in Mexico, two in Peru and one
in Chile. We asked interviewees about opportunities in Argentina, Brazil, Chile, Colombia,
Mexico and Peru. These markets accounted for 97% of private equity investments in Latin
America last year, according to the Latin American Venture Capital Association (Lavca).
Investment
12
10
$bn
8
6
4
2
0
10.3
8.1
6.4
4.6
2008
3.6
7.2
6.5
8.9
7.9
5.6
9.0
9.0
5.5
3.3
2009
2010
2011
2012
2013
2014E
4.1
JUNE 2014
FINANCE
Brazil
International
$20m-100m
Peru
$101m-500m
Chile 0
0
Peru
No plans to
raise funds
Mexico
Mexico
Over $500m
1
3
4
5
6
No. of respondents
3
2
No. of respondents
4.2
JUNE 2014
FINANCE
Signficant
negative impact
Moderate
negative impact
More
optimistic
Less
optimistic
Similar level
of competition
Moderate
positive impact
Significant
positive impact
Pessimstic
0
More
competition
Little or no impact
The same
Less
competition
I don't know
I don't know
5
10
15
20
No. of respondents
25
How is competition in
Latin America compared
to a year ago?
12
No. of respondents
15
10
15
20
No. of respondents
4.3
JUNE 2014
FINANCE
FUNDS BY ORIGIN
No. of respondents
Brazil
International
Mexico
Peru
Chile
10
15
20
% of respondents
Note: Respondents were asked to choose three options
Source: LatAm Confidential
4.4
JUNE 2014
FINANCE
72%
of private equity
investment in
Colombia in 2013 came from
four oil and gas deals
10
15
20
25
%
Source: Lavca
4.5
JUNE 2014
FINANCE
How will your investments change in the following countries over the next 12 months?
Increase
Decrease
I don't know
25
20
No. of respondents
15
10
5
0
Brazil
Chile
Colombia
Mexico
Peru
Note: 13 respondents expressed an interest in Colombia, 12 respondents expressed an interest in Peru and in Chile, 16 respondents expressed an
interest in Mexico and 22 respondents expressed an interest in Brazil
Source: LatAm Confidential
JUNE 2014
5.0
5.8 14 YEARS IN THE MAKING
SALVADORS METRO
FINALLY OPENS
5.10 OLYMPICS CONCERNS
RISE
5.12 2Q14 INFRASTRUCTURE
PROJECT TRACKER
INFRASTRUCTURE
BRAZIL UNDERACHIEVES ON
WORLD CUP PROJECTS
Brazil has failed to deliver on much of its R$26bn World Cup investment programme.
A fifth of public transport schemes have been shelved, nine out of 12 airports upgrades
are not finished and almost all stadiums have been delivered late and over budget.
Although the country is likely to guarantee security and avoid logistic problems
during the event itself, long-term economic benefits stemming from the tournament
will be less than expected.
Work on the 2016 Olympic Games has also been slow. One of four main sites is behind
schedule.
In spite of the slow start, we are more optimistic about the longer-term build-up of
urban transport infrastructure, which we believe will generate significant investment
opportunities for suppliers, bus manufacturers and multinational rail manufacturers
in particular.
razils R$26bn ($11.7bn) 2014 World Cup legacy will be patchy at best. Local
organisers in the federal government and in the 12 host cities argue the tournament
has served to trigger investment not just in world-class stadiums, but also in
top-notch infrastructure and human capital, providing long-term productivity
benefits.
But the reality is that a fifth of the planned public transport schemes have not been built
and many others will only be partially operational during the event. A small cluster of
privately run airports have undergone major expansion projects, but the vast majority of
planned airport upgrades remain unfinished. While the country now has a string of modern
stadiums, these were built two-thirds over budget and some of them without services, such
as Wi-Fi, that were initially promised.
In this report we assess Brazils performance, the implications for the future of the
R$370bn infrastructure investment programme, as well as planned investments in public
transport, and the economic impact of the tournament. We also consider the progress
on preparations for the 2016 Olympic Games in Rio de Janeiro. Finally, we identify future
opportunities in operators, suppliers and financiers.
In order to address these issues, we spoke with federal and local government officials,
representatives of local World Cup committees, the head of Brazils Public Olympics
Authority (APO), company executives, lawyers, analysts and officials at the powerful Federal
Audit Court (TCU). We also visited schemes and met with officials in Recife, Rio de Janeiro
and Salvador. These are three cities which historically have invested very little in public
transport, but between them are now spending at least R$25.4bn in this area. The three are
increasingly turning to the private sector to execute these schemes and they are improving
their long-term planning. Finally, we analysed official and company data.
We have also created a database of all major public transport investments postWorld Cup in Brazil, which is available online to subscribers as part of our LatAm
Confidential Transport Database. This includes data on investment levels, operators and
contractors, where available, as well as the rate of progress of the schemes. We will update
this on a regular basis.
5.1
JUNE 2014
INFRASTRUCTURE
BRAZIL UNDERACHIEVES ON
WORLD CUP PROJECTS
1. Airports and stadiums received most investment
Investments by sector
Original investment*
Airports
Urban transport
Total investment**
100
12
10
80
8
R$bn
60
45.6
30.4
40
19.6
20
12.0
23.4
12.8
Stadiums^
Other^^
34.3
22.0
Airports
Stadiums^
Urban
transport
Other^^
Original investment
Total investment
*As of 2010 except security, telecoms and tourism (classified as other). **As of Nov 2013 except investment data for Braslia and Viracopos airports which is from May
2014. ^Includes temporary structures for Confederations Cup. ^^Includes ports, security, telecoms and tourism
Sources: CGU, LatAm Confidential
5.2
JUNE 2014
INFRASTRUCTURE
BRAZIL UNDERACHIEVES ON
WORLD CUP PROJECTS
Elsewhere, many of the projects have been delayed and will only partially operate during
the World Cup. This is the case of the light rail scheme in Cuiab and the BRTs in Recife,
which we visited as part of a research trip in mid-May. In Recife, there were plans for two
BRT lines, one running north-south and the other east-west, with total investment originally
at R$272m. Total investment has now risen slightly to an estimated R$296m and the service
will only be working on a limited basis during the Cup. However, we found that in one of
the stations due to be operational many key elements needed for the service to be up and
running, including ticket barriers and display panels, were missing and bus lanes were not
yet separated from the rest of the traffic. Much of the route still looked like a building site.
As a result, most cities will resort to emergency measures to meet public transport needs
during the World Cup. Rio de Janeiro has declared public holidays on three match days,
while some cities still have to take a decision on this. Most of them will send public workers
home early on match days, and will also redirect traffic and create exclusion zones around
stadiums. Both Salvador and Recife will restrict access on their respective metro and BRT
systems on match days to World Cup ticket holders.
Airports
A little over R$9bn has been invested in the 12 main airports serving World Cup host
cities, substantially more than was initially intended (see chart 3). This is because of the
significant investments made in the three airports conceded to the private sector in 2012,
two years after the original cost projections for the event were made.
Guarulhos, for example, which is operated by Invepar and ACSA, spent R$3.1bn, 64%
more than was originally intended. The concessionaire has built a new terminal for
12m passengers, as well as a multi-storey car park and upgraded the existing terminals.
Viracopos, run by Triunfo (TPIS3:SAO), UGC and Egis, spent R$2.5bn, 237% more than
projected in 2010, building a new 22m passenger terminal, concourse and multi-storey car
park, schemes which are currently between 92 and 97% complete. Less extensive investments
were made by Corporacin Amrica and Infravix at Braslia. Guarulhos and Braslia were
completed according to the terms of the contract and in time for the World Cup. The
concessionaire at Viracopos will be fined for not meeting the event deadline. However, works
only started about 18 months ago, as a result of delays in auctioning the project by the
No. of
projects
8
1
3
9
7
2
2
10
Original*
Investment
Transport
(R$m)
sectors
1,522
BRT, roads, technology
364
Light rail
481
BRT
446
BRT, bus, roads,
technology
533
BRT, suburban and light rail
1,537
BRT, monorail
411
Roads
525
BRT, bus, roads,
technology
712
BRT, bus, rail, roads.
Recife
Rio de Janeiro
1,610
Salvador
568
So Paulo
2,860
Final**
No. of Investment
Transport
projects
(R$m)
sectors
7
1,406
BRT, roads, technology
1
44
Road
3
1,719
Road, tram
5
464
BRT, bus, roads,
technology
6
575
BRT, rail
0
0
n/a
3
472
Roads
2
16
Roads
7
891
BRT
1.989
BRT
19
Monorail
549
Pedestrian access
Road
5.3
JUNE 2014
INFRASTRUCTURE
BRAZIL UNDERACHIEVES ON
WORLD CUP PROJECTS
federal government. However, the fact that these three projects are being delivered (partially
or fully) on the eve of the World Cup means that there will be little time for tests to take place
and they will not be working at full capacity.
Progress of works designed to improve public airports has been even slower. None of
them will be complete in time for kick-off, despite some of the projects involving quite
minor alterations. In most cases this will have little operational impact. In Manaus, for
example, new gangways will not be ready to connect the terminal with aircraft, but the main
upgrades to the passenger terminal will be ready. Recife abandoned the one project it had
planned construction of a new air traffic control tower priced at R$20m, but the airport
Airport: Confins^
City: Belo Horizonte
Contract: Public works
Oct-13
Not completed
Apr-13
Upgrade of existing
passenger terminal,
new car park
Jul-13
Aug-11
Jun-13
Upgrade of existing
passenger terminal
Dec-13
Airport: So Gonalo de
Construction of greenfield
airport including passenger
Amarante City: Fortaleza
Contract: Concession 25 yrs (+5) terminal, runway, concourse
May-14
Not completed
Not completed
Not completed
Not completed
Apr-14
May-14
Jun-13
Apr-13
Airport: Galeo^
City: Porto Alegre
Contract: Public works
Upgrade of existing
passenger terminals 1 and 2
Not completed
Project shelved
Sep-12
Not completed
Mar-13
Not completed
Airport: Guarulhos
City: Rio de Janeiro
Contract: Public works
Airport: Viracopos
City: Salvador
Contract: Concession 30yrs
Nov-13
May-14
*July 2010. **Nov 2013 except Braslia. All values refer to investments up to World Cup, further investments planned particularly in conceded airports. ^Operators of all airports Infraero except Braslia (Infravix and Corporacin
Amrica), Guarulhos (Invepar and ACSA), Viracopos (Triunfo, UGC and Egis). Confins and Galeo were auctioned to private sector in November 2013 were 25 and 30 yrs respectively however concessionaires only take on full operation 2H14. NC: Not complete at time of going to press as per terms of original contract.
Sources: CGU, LatAm Confidential, Portal da Copa (Sinaenco)
5.4
JUNE 2014
INFRASTRUCTURE
BRAZIL UNDERACHIEVES ON
WORLD CUP PROJECTS
had already been modernised and is operating below capacity. In some cases the situation
may be more critical though. As of last February, the R$171m project at Fortaleza which
includes upgrade and expansion of the passenger terminal and which was originally to have
been finished by June 2013 was only 16% complete. A temporary tent-like structure has
been erected in its place. On a site visit in mid-May to Galeo Rio de Janeiros international
airport, where the upgrade of the passenger terminals is still incomplete self check-in
at electronic terminals for a domestic flight took one hour due to long queues and lack of
assistance from overstretched staff. Facilities were poor.
Stadiums
R$8bn or just under a third of all World Cup investments, was spent on upgrading and
building 12 stadiums (see chart 4). That is twice what was spent in South Africa in 2010,
which had two fewer stadiums. Just two of Brazils stadiums Minero in Belo Horizonte
and Castelo in Fortaleza were built on time, in December 2012. Half of all stadiums
Stadium: Minero
City: Belo Horizonte
Contract: PPP 27 yrs
Contractors:
Construcap, Egesa and
Hap (also operator)
Dec-12
Contractors:
Andrade Gutierrez
and Via Engenharia
Dec-12
Stadium: Pantanal
City: Cuiab
Contract: Public works
Contractors:
Santa Brbara and
Mendes Jnior
Dec-12
Stadium: Baixada
City: Curitiba
Contract: Private works
Contractors:
CAP
Dec-12
Stadium: Castelo
City: Fortaleza
Contract: PPP 8+8yrs
Contractors: Galvo,
Andrade Mendona,
BWA (BWA also operator)
Dec-12
Stadium: Amaznia
City: Manaus
Contract: Public works
Contractors:
Andrade Gutierrez
Dec-12
Stadium: Dunas
City: Natal
Contract: PPP 20 yrs
Contractors:
OAS
Dec-12
Contractors:
Andrade Gutierrez
Aug-12
Stadium: Pernambuco
City: Recife
Contract: PPP 33 yrs
Contractors:
Odebrecht (contractor). ISG,
AEG Facilities (operators)
Dec-12
Stadium: Maracan
City: Rio de Janeiro
Contract: Public works
Contractors:
Andrade Gutierrez,
Odebrecht
Dec-12
Contractors:
Odebrecht and OAS
(also operators)
Dec-12
Stadium: Itaquero
City: So Paulo
Contract: Private works
Contractors:
Odebrecht
Dec-12
Dec-12
May-13
Apr-14
May-14
Dec-12
Mar-14
Dec-13
Apr-14
May-13
May-13
Apr-13
May-14
*As of Jan 2010. **As of Nov 2013, date of last publication of Matrix of Responsibilities. ^R$138m on stadium itself. ^^Original value refers to upgrade to Morumbi stadium, event subsequently moved to Itaquero.
Sources: CGU, LatAm Confidential, Portal da Copa (Sinaenco)
5.5
JUNE 2014
INFRASTRUCTURE
BRAZIL UNDERACHIEVES ON
WORLD CUP PROJECTS
were not inaugurated until this year and two of them not until this month. In some cases,
test matches have taken place with works not yet finished. All stadiums bar the Castelo,
where costs were reduced by around 17% as a result of stiff competition for the construction
contract, were delivered over budget. In Rio, the cost increase was as much as 75%.
All manner of problems, ranging from Fifa instructions to funding difficulties and heavy
rains, conspired to create delays and increase costs. But we believe four structural issues
underpin the failures of the 12 host cities to meet their commitments. We also argue that
these matters will continue to pose obstacles to the development of future projects: poor
planning, delays associated with expropriations, red tape, and higher-than-expected
construction costs.
1. Poor planning
Many of the local authorities responsible for developing the schemes had insufficient
resources and technical capacity, even though a 2012 law obliges them to draw-up public
transport plans. For example, Manaus planned two projects for the World Cup a BRT
and a monorail with total investment of R$1.5bn and funding approved from the state
government and the Caixa Econmica Federal, the public bank. However, auditors pointed
out that the two projects followed much of the same route and even had some stations
in exactly the same location. As a result, the TCU and the Comptroller General (CGU)
intervened and funding was blocked. Bar a few exceptions such as So Paulo and Curitiba,
long-term urban planning tends to be poor in Brazil. Consequently, many schemes such
as the BRTs in Belo Horizonte are unrelated to any broader and more consistent vision.
Similar inadequacies help explain the cost increases and delays in stadium constructions.
For example, project designs were altered and entirely new roofs installed in stadiums in
Curitiba and Rio de Janeiro.
2. Expropriations
Perhaps the largest single cause of delays has been due to legal disputes over land
expropriations. The state of Pernambuco created a department staffed with architects and
engineers tasked with dealing with this matter, but the process took much longer than
expected and as a result some routes had to be altered. When we visited Recife in midMay, one month prior to kick-off, only 90% of expropriations for World Cup projects been
completed. In Belo Horizonte, schemes were delayed for over a year as a result of this and
the BRTs will not be fully operational. In Rio, residents of three shantytowns went to the
Organisation of American States to protest that their human rights were being violated as
a result of having to be relocated to make way for new BRT lines, delaying the schemes (LC
Mar 31 2011, Infrastructure). These factors are particularly challenging because of the
reluctance of local mayors to take action that might be controversial. The So Paulo state
government has attempted to reduce expropriation risk for contractors on future projects
such as Line 6 and 18 by assuming the costs associated with this.
3. Red tape
Tendering processes in the public sector are inordinately complex and time-consuming,
and contributed to the delays involving public entities such as Infraero, the airport
operator. While the federal government addressed this by developing a new fast-track
tender process, the Differentiated Contracts Regime (RDC) [it was subsequently extended
to all federal infrastructure schemes], the device has not been entirely effective. Some
World Cup projects were submitted under the old tender law. Moreover, even under the
new framework those affected still enjoy recourse to appeal. Environmental licensing
procedures are typically long drawn-out, notwithstanding reforms that provide fast-track
licensing for motorway concessions.
Brazils highly autonomous auditors, the TCU and the Public Ministry (MP) and their
state and municipal equivalents, intervene frequently. In some cases, this has helped
5.6
JUNE 2014
INFRASTRUCTURE
BRAZIL UNDERACHIEVES ON
WORLD CUP PROJECTS
reduce overcharging. The TCU claims to have saved the public purse a total of R$550m on
World Cup projects, including R$97m on the Maracan stadium in Rio as a result of, for
example, identifying items on the budget that had been mentioned twice. However, in other
cases, these bodies tend towards a pedantic legalism. For example, on the So Paulo Line 17
monorail auditors intervened over the lack of an engineering blueprint, but Brazilian law
does not clearly define what type of blueprint is required. Despite these deficiencies, reform
which would require a constitutional amendment would be unpopular and is highly
unlikely to occur (LC Mar 28 2013, Infrastructure).
7.75%
Increase
in the
cost of construction in the
12 months to April 2014,
compared with consumer
inflation of 6.28%
THE IMPACT
The R$26bn investment in the World Cup has helped create jobs and boost the bottom line of
local contractors, but is small compared to the overall size of Brazils economy. It represents
just 0.7% of planned investments from 2010-2014, according to Moodys, the ratings agency.
Most construction contracts have been picked up by Brazils large privately held
contractors. Odebrecht, for example, was involved in consortiums building four stadiums,
as was Andrade Gutierrez. OAS built two. The food and drinks, hospitality and advertising
sectors are likely to see a short-term uptick in sales during the 32 days of the event. We are
more optimistic about the impact of some stadium developments. Some football venues
could be underused, especially in cities such as Manaus that lack both strong local teams and
football tradition. However, stadiums such as Fonte Nova in Salvador have been created as
multi-use arenas, allowing their operators to maximise ticket sales.
There is also the potential for some stadiums to help in urban regeneration, as was seen
with the Olympics sites in London and Barcelona. For example, the Arena Pernambuco in
Recife is part of a 240ha site with plans for a university, 4,700 housing units and a convention
centre. Property prices around Fonte Nova in a previously down-at-heel part of central
Salvador have risen substantially since the stadium was opened in April 2013. Similar plans
to develop the area exist around the Itaquero stadium in the poor east of So Paulo.
Expansion in the capacity and improvements to the level of comfort of Brazils airports
should help to ease pressure on a sector that has struggled to cope with rapidly rising
demand. On urban transport, although we are sceptical about the pace of progress and
the immediate impact of schemes, we believe they play an important role in kick-starting
a longer-term and more ambitious push to improve the competitiveness of Brazilian
infrastructure vis--vis its peers (see chart 5). In 2012, the federal government announced
R$22bn of investments for public transport in cities with over 700,000 inhabitants under the
PAC Urban Mobility programme (LC Aug 2 2012, The Word in Brasilia). Further sums
Brazil
114
Chile
45
Colombia
117
Mexico
66
Peru
101
China
74
Indonesia
85
Korea
23
Poland
84
Russia
93
Turkey
41
123
103
120
131
46
65
27
32
96
113
130
110
64
60
51
62
85
102
98
93
65
20
54
59
68
44
78
89
22
8
15
21
103
70
105
97
102
31
136
88
33
52
44
63
5.7
JUNE 2014
INFRASTRUCTURE
BRAZIL UNDERACHIEVES ON
WORLD CUP PROJECTS
will be contributed to projects in these cities via loans from public banks, in particular the
BNDES, state and municipal governments, as well as by the private sector.
We have spoken with federal and local governments in order to identify which schemes
are being built where and by whom. We have identified a pipeline of 68 projects. 37 of these
have estimated investments of R$86bn and for the most part have either been tendered
already or they are being built. The investments associated with a further 31 schemes are still
to be calculated (see chart 6).
Of this pipeline, seven projects so far will be developed as PPPs and two of these have not
yet been tendered Curitiba metro and Line 18 of the So Paulo monorail. The former will
6. R$86bn pipeline
Non-World Cup public transport projects under development in Brazil
BRT
BRT
Roads
Bus
Ferry
Metro
Rail
Monorail
Tram
Par
Amazonas
BRT
BRT
Piau
BRT
Maranho
Ceara
Paraba
Pernambuco
BRT
Goias
Alagoas
BRT
Alagoas
Amazonas
Bahia
Cear
Distrito Federal
Gois
Maranho
Minas Gerais
Mato Grosso do Sul
Par
Par
Paraba
Paraba
Pernambuco
Piau
Paran
Rio de Janeiro
Rio Grande do Norte
Rio Grande do Sul
So Paulo
Total
Investment
(R$m)
250
219
7,450
n/a
1,228
1,565
n/a
n/a
n/a
n/a
414
n/a
n/a
1,836
n/a
4,565
16,080
n/a
383
52,280
86,270
Bahia
Distrito Federal
BRT
Minas Gerais
Rio de Janeiro
BRT BRT
So Paulo
Paran
BRT
BRT
BRT
BRT
Sources: Abifer, Casa Civil of Bahia State Government, , LatAm Confidential, Ministry of Cities, So Paulo Metropolitan Transport Secretariat
5.8
JUNE 2014
INFRASTRUCTURE
BRAZIL UNDERACHIEVES ON
WORLD CUP PROJECTS
be developed as a 30-year PPP with around half the funding coming from the public sector and
the tender is expected to be launched imminently, while the bid for the latter is being revised
to address issues raised by the TCE, the state branch of the audit court. Other future schemes,
which are at earlier stages and which may be developed as PPPs, are the Porto Alegre metro
and Line 20 of the So Paulo metro.
22 of these schemes are already being built. Our sites visits have shown particular progress
in the cases of the metro schemes in Rio de Janeiro, where traffic has been completely rerouted along major thoroughfares, [a consortium led by Odebrecht and Queiroz Galvo has
completed the excavation of a 5km long tunnel between two of the stations], and well as in
Salvador, where the scheme will open next month (see 14 years in the making Salvadors
metro finally opens).
We believe that this longer-term build-up is generating investment opportunities.
1. Operators
There are two major listed operators in Brazil, CCR (CCRO3:SAO) and Triunfo, while a
third, Invepar, is planning an IPO later this year.
CCR in which the privately held contractors Camargo Correa and Andrade Gutierrez
both hold about 17% has a diversified portfolio with a number of mature projects
generating good cashflow in the toll-road sector. It also has stakes in the Rio tram, Salvador
metro and Line 4 of So Paulo metro (all under construction), airports in the Caribbean and
Ecuador. Also, it recently required the concession to operate and expand Confins airport,
which it will fully assume later this year (Update Alert, Nov 25 2013). Revenues increased
12% YoY in 1Q14. Its leverage is relatively low, with net debt as a share of ebidta over the last 12
months falling from 2.1x in 1Q13 to 1.9x in 1Q14 (see chart 7).
Triunfo does not have any urban transport schemes, but it has a stake in Viracopos
airport, as well as in ports and roads, which helped revenues at the company grow 94% to
R$474m in 1Q14. However, the capex for Viracopos is significant, with the concessionaire
5.9
JUNE 2014
INFRASTRUCTURE
11.2%
YoY fall in
production
for Brazils domestic market
among the six main local bus
manufacturers in 1Q14
BRAZIL UNDERACHIEVES ON
WORLD CUP PROJECTS
(in which UGC, Egis and Infraero also hold stakes) taking out R$1.8bn in loan and bond
commitments recently. As a result, Triunfos debt is also relatively high, at 3.6x.
Inveparhas stakes in relatively new projects the Transolmpica BRT, the Rio tram and
Lines 1 and 2 of the metro in that same city. It is also responsible for acquiring the rolling
stock for Line 4 of the Rio metro (15 trains from Chinas CCR) and has the right to operate
that line. Finally, it has a stake in Guarulhos airport. It has been relatively successful on
these schemes, building two new stations on the Rio metro, and carrying out the expansion
of Guarulhos in record time. It has strong shareholders in the form of the pension funds of
Petrobras (PETR4:SAO) and Caixa Econmica Federal, and a Banco do Brasil (BBAS3:SAO)
investment vehicle, as well as the contractor OAS, which owns 22.4%. It is expected to hold an
IPO later this year.
2. Suppliers
Bus manufacturers have seen sales decline after several municipalities froze fares following
last years protests and then deterred investment. Production for the domestic market
among the six main local manufacturers fell 11.2% YoY in 1Q14, compared to a rise in exports
of 4.4% over the same period. As a result, suppliers negotiated with the federal government
to have investments in school buses brought forward. However, the majority of new public
transport investments are in the bus and BRT sectors. Between 4,000 and 4,500 units will
be ordered over the next two years, predicts Jos Martins of Fabus, an industry association,
including orders related to 60 projects worth R$8bn in medium-sized cities. Investment
levels should pick up in particular from 1H15, as tariff rises are likely to be delayed until after
the elections.
There are good opportunities for rail suppliers. At least R$33bn of major rail schemes exist
on which no supplier has been appointed. These include two monorails in Rio de Janeiro
and So Paulo, six metro schemes Curitiba, Fortaleza, So Paulo and Porto Alegre a seventh
project, line 2 of Salvador metro is likely to be supplied by Hyundai-Rotem (A064350:KSC)
which supplied trains for line 1 and an electric light rail project in Salvador.
We believe that these schemes should favour companies that manufacture locally
such as Alstom (ALO:PAR), Bombardier (BBD.B:TOR), Scomi (SCOMI:KLS) and Siemens
(SIEX.N:GER) and which can take advantage of tax incentives and cheap public financing.
Alstom recently invested 15m ($20m) in a plant in So Paulo making trams for Brazil and
the rest of South America. Orders for the global company in Central and South America were
up 7% in 1Q-3Q13. Bombardier also recently opened a plant in So Paulo making monorail
trains from which it is supplying Line 15 of that the So Paulo network and which is intended
to become its global production base for this type of vehicle. The company told us that
1Q14
Ebidta
1,200
800
900
600
R$m
Times
1,000
R$m
1,500
600
400
300
200
CCR
Invepar
Triunfo
2
1
CCR
Invepar
Triunfo
CCR
Invepar
Triunfo
Sources: Companies
5.10
JUNE 2014
INFRASTRUCTURE
R$300m
BRAZIL UNDERACHIEVES ON
WORLD CUP PROJECTS
it also plans to bid for Line 18 of the So Paulo monorail alongside the same grouping (with
Queiroz Galvo and OAS) for which it is supplying Line 15.
However, there is some uncertainty relating to ongoing investigations by the public
ministry, the anti-trust authority, Cade, and the federal police into alleged cartel activity
concerning supply of trains to the So Paulo rail network and revealed by Siemens
(SIEX.N:GER). Companies under investigation include Alstom, Balfour Beatty Rail Power
Systems (BBY:LSE), CAF, Bombardier, Daimler-Chrysler (DAIX.N:GER), Hyundai-Rotem,
MGE (MGEE:Nasdaq), Mitsui (8031:TYO), Siemens, Tejofran, Temoinsa, TTrans.
Siemens would be treated with leniency because of its role in revealing the cartel.
However, any companies convicted could face fines, suspension from public tenders for up
to two years, and criminal charges for directors.
3. Debt finance
Financing for the sector is dominated by BNDES and the Caixa. However, there is a small
but growing use of infrastructure bonds, which carry certain tax exemptions. For example,
the operator of Guarulhos airport issued four series of bonds due in 2025 in March this year
for a total of R$300m. The Viracopos concessionaire in February issued the same amount
for four series due in 2025 and 2026. The bonds were fairly small in both cases compared
to the amounts they took out with the BNDES in loan commitments: R$3.5bn and R$1.5bn,
respectively.
Destination*
% of total^
Municipality
State
Federal
Other public
Private
Legacy
Legacy
Legacy
Facilities
10.4
22.8
3.6
3.5
Operation
Legacy
Facilities
18.7
27.6
11.2
*Legacy refers to transport, sanitation and urban renewal schemes which are not directly related to the operation of the event. Other public refers to funding across all
three spheres of government for facilities such as stadiums and training areas directly related to the games. **Data does not add up to 100% because of rounding down of
decimal points. ^Includes payments from public to private sector
Source: APO
5.11
JUNE 2014
INFRASTRUCTURE
OLYMPICS
CONCERNS RISE
in central Rio de Janeiro. I remember in London when [G4S] said 20 days before the event
that it wouldnt [be able to look after] security. He insists that disputes are inevitable given
the complexity of the Olympics, with every committee wants the best for itself, every
federation thinks that their sport is the most important. This is normal, but there is a cost
associated with this and we need to see what is possible within the demands of the IOC.
The total budget so far for the event (which is revised every six months) currently stands
at R$37.5bn ($16.8bn), of which R$5.6bn will be spent on the facilities, R$7bn on operations
and the remainder on transport, sanitation and a variety of infrastructure schemes (see chart
1). 40% of the funds will come from the public sector with additional amounts, although it is
not yet clear how much, in the form of payments and other guarantees made through public
private partnerships.
So far, less than a fifth of the planned work on facilities has been completed. Gen Azevedo,
who reports directly to President Dilma Rousseff, admits that the timetable for the R$854m
2. Olympics schemes
Sector/project
Description
Investment (R$m),
[private funding]
Stage
Estimated
completion
Facilities
Athletes village
n/a
[2,910]
1Q16
n/a
900
1Q16
Copacabana complex
n/a
n/a
Deodoro complex
853
Maracan complex
183
Training
n/a
and
n/a
1,652
4Q14
n/a
n/a
Sanitation
Barra da Tijuca Sanitation programme
Sewage collection
131
3Q15
607
2Q16
369
2Q15
Decontamination of water
673
114
n/a
and
1Q16
[431]
2Q16
Services
Operation of games
[7,000*]
n/a
n/a
Transport
Barra roads
BRT Transoeste
514
1Q16
92
BRT Transolimpica
1Q16
2284 [479]
Jo bridge expansion
2H16
460
2H16
Line 4 metro
Tram
8,791 [1,157]
2Q16
1189 [656]
Upgrade to stations
2H16
n/a
n/a
Other
118
1Q16
8,200 [7,608]
2Q16
110
3Q14
Urban renewal
Other
Anti-doping laboratory
n/a
Project stage:
Project and contract development, pre-bid.
Key studies approved, contract and tender published. Operator or contractor selection process underway.
Construction underway
operator selected. Construction pending.
Contractor/
5.12
JUNE 2014
INFRASTRUCTURE
OLYMPICS
CONCERNS RISE
upgrade of the Deodoro stadium one of the four sites in which the games will be held and
which will be used for sports such as mountain biking and shooting is tight. Contracts
for two separate projects to develop the site were tendered in April, several months later than
had been planned. A bidder has yet to be selected, so work will not be completed until late
2015 or early 2016.
Gen Azevedo says confusion about which authority was in charge of the site was the
main reason for the delay, with the federal government passing on responsibility to the
state government which in turn passed it on to the municipality. Gen Azevedo said that the
rigidity of Brazilian norms of public administration must take some of the blame.
There is some progress, however, he said. The foundations for the main Olympic Village
in Barra da Tijuca which is being carried out by a consortium led by Odebrecht have been
laid and work is on schedule. This is despite a recent strike over pay by construction workers
on the site. The dispute has been settled and weekend shifts have been introduced to make up
for lost time. Elsewhere, developers are pressing ahead with a variety of transport schemes
although many of them are not scheduled to be completed until 2016 (see chart 2).
5.13
JUNE 2014
INFRASTRUCTURE
INFRASTRUCTURE
PROJECT TRACKER
R$8bn on stadiums of which 52% is publicly funded and a further 46% was financed in
the form of loans from public banks to the private sector (see Brazils underachieves on
World Cup projects).
The federal government has announced that it intends to launch tenders for public works
at provincial airports from June. This is part of a R$7.3bn airport investment plan, which
includes subsidising airfares, increasing the number of flights and improving facilities at
these locations. These schemes will not be developed on a PPP basis, as has been the case with
six airports to date (including five existing airports and a greenfield project in Natal), because
they would not be sufficiently profitable. However, the relative success of Brazils airport PPP
programme means that airports in a number of large cities could be privatised. Potential
candidates include the airports of in Salvador, Recife, Porto Alegre, Manaus and Fortaleza.
JUNE 2014
6.0
GOING UP
LatAm
Argentina
Brazil
Chile
Colombia
Mexico
Peru
32.8
30.0
27.2
25.7
18.6
11.5
31.0
30.1
26.1
47.4
52.9
47.2
41.4
38.7
40.5
26.5
19.4
18.5
57.4
59.4
57.0
48.9
45.3
42.8
39.5
31.7
23.7
51.6
50.0
46.6
53.9
48.0
48.6
55.6
52.9
54.5
41.2
34.4
32.9
60.9
62.7
60.3
67.0
66.3
65.3
77.0
78.3
75.5
69.8
66.5
64.3
65.1
68.4
65.1
65.1
64.7
63.9
62.9
64.2
65.9
55.8
57.6
57.9
54.5
56.1
54.0
63.3
64.2
62.6
52.1
52.1
48.4
56.0
58.5
60.0
52.0
55.5
52.8
56.8
60.2
59.8
51.7
55.4
54.3
56.6
46.4
45.9
62.1
40.6
35.9
57.2
54.5
53.0
54.4
45.6
45.0
54.7
43.7
44.4
54.5
34.4
37.0
57.3
51.9
50.8
50.5
51.7
51.9
32.0
35.1
38.2
55.7
58.8
54.6
50.4
52.0
52.9
48.7
54.1
53.0
45.3
40.8
47.3
64.6
66.3
68.0
46.4%
3Q13
4Q13
1Q14
5.5%
3Q13
4Q13
1Q14
YoY increase of
Mexican exports in
Apr-14
Spending Index
3Q13
4Q13
1Q14
10.4%
Increase in
Colombian industry
in Mar-14
3Q13
4Q13
1Q14
Source: LatAm Confidential
Brazil
Chile
Colombia
Mexico
Peru
Venezuela
GOING DOWN
26.9%
475.1
433.0
441.4
492.1
313.0
315.4
309.3
308.6
344.8
22,317.8
22,062.2
22,120.8
22,482.3
22,100.2
78,985.1
79,944.9
80,633.2
80,080.2
83,788.6
2,456.0
2,440.3
2,447.9
2,513.0
63.1
63.3
64.1
63.3
65.7
1,239.1
1,273.2
1,319.5
1,339.8
1,199.7
616.4
572.4
578.1
637.1
1,928.4
1,959.2
1,970.7
1,953.2
83,967.8
83,626.3
83,739.4
83,614.7
82,459.1
310,061.9
318,519.1
317,992.4
318,152.0
311,178.6
9,620.2
9,692.4
9,751.3
9,505.1
130.4
131.0
131.0
131.3
134.0
1,259.6
1,295.0
1,339.1
1,362.7
1,220.1
944.9
935.1
947.4
944.1
3,818.5
3,831.1
3,875.2
3,820.2
140,020.4
141,306.6
141,671.9
142,038.8
139,978.1
338,625.4
347,393.5
347,164.9
346,105.0
340,197.4
11,641.3
11,814.5
11,882.0
11,564.0
n/a
n/a
n/a
n/a
n/a
1,259.6
1,295.0
1,339.1
1,362.7
1,220.1
n/a
n/a
n/a
n/a
n/a
10.50
10.75
11.00
11.00
10.00
4.25
4.00
4.00
4.00
4.50
3.25
3.25
3.25
3.50
3.25
3.50
3.50
3.50
3.50
3.50
4.00
4.00
4.00
4.00
4.00
n/a
n/a
n/a
n/a
n/a
27.7
27.5
27.0
28.2
30.6
360.9
362.7
363.9
366.7
358.8
40.0
40.0
41.0
40.3
41.1
22.2
22.1
22.1
22.5
43.6
84.0
83.6
83.7
83.6
174.9
140.1
141.3
141.7
142.0
65.7
21.5
4.9%
Jan-14
Feb-14
Mar-14
Apr-14
2013
1.1%
YoY decline in
Brazilian retail sales
in Mar-14
Jan-14
Feb-14
Mar-14
Apr-14
2013
6.1
JUNE 2014
METRICS THAT
MATTER
MACRO AND CONSUMER
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Venezuela
5.6
3.0
-0.9
2.2
1.9
2.3
1.7
5.0
2.7
2.6
4.0
3.2
5.1
5.0
4.2
4.6
1.4
0.7
1.8
1.1
2.9
4.5
5.1
5.0
5.3
1.1
1.0
1.3
-1.7
7.3
5.5
6.3
2.0
-1.5
-12.3
-5.0
0.4
-0.4
11.0
8.0
5.7
6.1
-3.7
-3.1
-1.8
4.5
4.6
1.8
5.9
6.1
-14.4
-16.6
-9.0
-3.3
5.7
6.2
6.3
5.9
6.0
3.2
3.5
4.3
3.0
3.1
2.3
2.5
2.7
1.9
3.1
4.2
3.8
3.5
4.0
4.1
3.8
3.4
3.5
2.9
2.7
53.3
54.8
52.7
52.0
25.9
27.8
28.9
15.0
6.1
8.0
8.8
5.1
n/a
n/a
n/a
n/a
1.3
2.6
3.4
-0.5
1.7
1.7
2.5
1.3
2.5
2.6
2.6
1.6
52.4
6.4
n/a
n/a
7.1
7.1
4.3
4.8
5.1
4.9
5.4
5.7
6.1
6.1
6.5
6.0
8.4
11.1
10.7
9.7
9.6
4.8
4.8
4.7
5.2
4.3
6.5
7.4
7.0
6.4
6.0
5.6
9.5
7.2
7.5
-0.5
-5.9
-4.0
-0.2
-2.4
4.7
-1.9
2.3
0.9
2.6
1.0
-0.3
1.7
4.0
10.4
-0.0
3.3
0.5
3.4
1.4
3.5
6.0
1.7
3.9
-0.3
-2.1
36.5
3.9
6.4
8.7
-1.1
4.3
0.8
6.7
3.7
-0.2
9.6
4.6
4.0
5.2
5.9
4.7
2.2
-0.3
-1.7
1.7
n/a
n/a
n/a
n/a
n/a
47
55
50
51
964
300
246
229
280
2,775
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
56
52
56
698
n/a
n/a
n/a
n/a
n/a
1
1
2
1
99
6.1
3.0
-3.6
3.4
2.6
1.8
10.9
28.7
Unemployment (%)
Dec-13
Jan-14
Feb-14
Mar-14
2013
Inflation in Argentina is MoM % change in 2014. Inflation in Peru is only for Lima city. Inflation for Venezuela is only for Caracas city. Unemployment in Argentina is a quarterly figure. Retail sales in Argentina
and Chile are only supermarket sales.
Sources: Thomson Reuters Datastream, Latin American Consensus Forecast, central banks
FISCAL
General government revenue (GDP %)
2010
2011
2012
2013E
General government expenditure (GDP %)
2010
2011
2012
2013E
General government overall balance (GDP %)
2010
2011
2012
2013E
Argentina
Brazil
Chile
Colombia
Mexico
Peru
37.2
37.4
40.3
42.6
37.2
36.6
37.2
37.1
23.5
24.7
23.9
23.0
26.2
26.9
28.4
27.7
22.8
23.2
23.6
23.4
20.0
20.9
21.7
21.1
38.5
40.9
44.6
46.0
39.9
39.1
40.0
40.5
23.8
23.2
23.3
23.6
29.5
28.9
28.2
28.7
27.2
26.6
27.3
27.2
20.3
19.1
19.6
21.0
-1.4
-3.5
-4.0
-3.5
-2.7
-2.5
-2.8
-3.3
-0.3
1.4
0.6
-0.7
-3.3
-2.0
0.2
-1.0
-4.4
-3.4
-3.7
-3.8
-0.3
1.8
2.0
0.5
Source: IMF
6.2
JUNE 2014
METRICS THAT
MATTER
EXTERNAL ACCOUNTS
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Venezuela
5.4
5.3
6.4
83.0
81.9
15.9
17.6
19.7
242.2
248.4
6.6
7.3
6.7
77.4
77.2
4.3
4.4
58.8
62.0
32.5
32.2
32.8
379.1
404.1
3.0
2.9
41.8
43.4
90.4
85.2
5.3
5.2
5.5
74.0
70.9
18.1
17.5
19.2
239.6
243.9
5.3
5.6
5.7
75.0
74.5
5.0
4.9
59.4
60.3
32.0
32.5
33.2
380.3
411.7
3.0
3.4
42.2
43.7
53.6
51.1
0.1
0.1
0.9
9.0
11.0
-2.2
0.1
0.5
2.6
4.5
1.3
1.7
1.0
2.4
2.7
-0.7
-0.5
-0.6
1.7
0.5
-0.3
-0.4
-1.2
-7.6
0.0
-0.5
-0.4
-0.3
36.8
34.1
-1.1
-1.7
-4.3
-2.6
-17.1
-21.0
-25.2
-81.4
-78.5
-3.4
-2.4
-0.8
-9.4
-8.4
-3.8
-3.4
-12.7
-13.0
-5.5
-4.7
-4.5
-21.5
-24.2
-2.5
-2.2
-3.1
-10.1
-9.9
-4.1
10.3
10.3
n/a
n/a
13.8
20.3
14.2
65.3
59.9
n/a
n/a
30.3
19.0
4.9
4.2
15.6
15.4
3.4
6.5
5.8
15.4
29.1
2.0
0.8
2.3
12.2
10.9
0.4
3.2
2.8
Exports ($bn)
Feb-14
Mar-14
Apr-14
2013
2014E
Imports ($bn)
Feb-14
Mar-14
Apr-14
2013
2014E
Trade balance ($bn)
Feb-14
Mar-14
Apr-14
2013
2014E
Current account ($bn)
3Q13
4Q13
1Q14
2013
2014E
FDI ($bn)
3Q13
4Q13
1Q14
2012
2013E
12.5
7.7
COMMODITY PRICES
Coffee
(c/lb)
Copper
($/metric tonne)
Iron ore
($/metric tonne)
Gold
($/troy ounce)
Oil
($/bbl)
Orange juice
(c/lb)
Soyabeans
($/bushel)
Sugar
(c/lb)
May 27
157.3
2 wk prev
162.8
Change (%)
-3.4
Change YTD (%) 46.4
7,017.5
6,887.0
1.9
-4.9
98.1
103.0
-4.8
-26.9
1,268.6
1,297.0
-2.2
5.0
104.2
101.7
2.4
5.7
158.1
161.8
-2.3
15.8
15.3
14.9
2.1
17.1
17.9
18.5
-3.2
8.0
Argentina
(peso)
Brazil
(real)
Chile
(peso)
Colombia
(peso)
Mexico
(peso)
Peru
(nuevo sol)
Venezuela
(bolvar)
11.8
10.8
9.5
18.0
2.2
2.2
1.2
-5.2
554.0
551.4
0.5
5.8
1,920.4
1,920.0
0.0
-0.6
12.9
12.9
-0.4
-1.6
2.8
2.8
0.3
-0.2
6.3
6.3
0.0
0.0
DOLLAR VS CURRENCIES
May 27
2 wk prev
Change (%)
Change YTD (%)
Source: Thomson Reuters Datastream
EQUITY INDICES
Argentina (Merval)
Brazil (Bovespa)
Chile (IGPA)
Colombia (IGBC)
Mexico (IPC)
Peru (IGBL)
Venezuela
May 27
7,571.6
52,172.4
19,222.7
13,636.7
41,959.0
15,770.3
2,177.0
2 wk prev
6,866.9
53,907.5
19,341.4
13,690.7
42,236.8
15,815.9
2,176.0
Change (%)
10.3
-3.2
-0.6
-0.4
-0.7
-0.3
0.0
40.4
1.3
5.5
4.3
-1.8
0.1
-20.4
6.3
JUNE 2014
METRICS THAT
MATTER
JP MORGAN EMBI+ BONDS
Argentina
Brazil
Colombia
Ecuador
Mexico
Panama
Peru
Venezuela
846
774
9.3
4.7
216
205
5.4
-3.6
153
146
4.8
-7.8
378
340
11.2
-28.7
147
139
5.8
-5.2
177
169
4.7
-11.1
152
137
10.9
-4.4
1,033
1,013
2.0
-5.5
179.1
187.4
-4.5
5.7
992.8
992.1
0.1
7.2
516.7
515.0
0.3
7.0
823.7
826.5
-0.3
4.7
589.3
588.3
0.2
7.4
1,139.6
1,137.9
0.2
8.9
1,037.3
1,042.1
-0.5
8.2
1,044.7
1,047.2
-0.2
11.8
FRONTIER COUNTRIES
Bolivia
GDP (YoY% change)
Consumer price index (YoY% change)
Current account ($bn)
Costa Rica
GDP (YoY% change)
Consumer price index (YoY% change)
Current account ($bn)
Dominican Republic
GDP (YoY% change)
Consumer price index (YoY% change)
Current account ($bn)
Ecuador
GDP (YoY% change)
Consumer price index (YoY% change)
Current account ($bn)
El Salvador
GDP (YoY% change)
Consumer price index (YoY% change)
Current account ($bn)
Guatemala
GDP (YoY% change)
Consumer price index (YoY% change)
Current account ($bn)
Honduras
GDP (YoY% change)
Consumer price index (YoY% change)
Current account ($bn)
Nicaragua
GDP (YoY% change)
Consumer price index (YoY% change)
Current account ($bn)
Panama
GDP (YoY% change)
Consumer price index (YoY% change)
Current account ($bn)
Paraguay
GDP (YoY% change)
Consumer price index (YoY% change)
Current account ($bn)
Uruguay
GDP (YoY% change)
Consumer price index (YoY% change)
Current account ($bn)
2009
2010
2011
2012
2013E
2014E
3.4
0.3
0.8
4.1
7.2
0.9
5.2
6.1
0.5
5.2
5.3
2.0
6.8
6.5
1.0
5.5
6.4
1.0
-1.0
4.1
-0.6
5.0
5.8
-1.3
4.4
4.8
-2.2
5.1
4.5
-2.3
3.5
3.7
-2.6
3.0
5.4
-3.0
3.5
5.8
-2.3
7.8
6.2
-4.3
4.5
7.8
-4.4
3.9
3.9
-4.0
4.1
3.9
-2.6
4.1
4.5
-2.3
0.6
4.3
0.2
2.8
3.3
-1.6
7.4
5.4
-0.2
5.0
4.2
-0.2
4.5
2.7
-1.1
4.2
3.5
-1.5
-3.1
0.1
-0.3
1.4
2.1
-0.6
2.2
5.1
-1.1
1.9
0.8
-1.3
1.7
0.8
-1.5
2.0
2.2
-1.5
0.5
-0.3
0.3
2.9
5.4
-0.6
4.2
6.2
-1.6
3.0
3.4
-1.4
3.7
4.4
-1.5
3.4
4.3
-1.8
-2.4
2.9
-0.6
3.7
6.5
-0.8
3.7
5.6
-1.5
3.3
5.4
-1.7
2.6
4.9
-1.7
3.1
6.6
-1.5
-2.2
0.9
-0.8
3.6
9.2
-0.9
5.4
8.0
-1.3
5.2
6.7
-1.4
4.6
5.5
-1.3
4.5
6.2
-1.4
3.9
1.7
-0.2
7.5
5.0
-2.8
10.8
6.4
-3.8
10.7
4.5
-3.3
8.3
3.6
-4.8
6.6
3.2
-4.1
-4.0
1.9
0.7
13.1
7.2
-0.7
4.3
4.9
-0.3
-1.2
3.9
0.1
14.4
3.8
0.6
4.9
4.9
0.7
2.2
6.1
-0.4
8.9
7.0
-0.7
6.5
8.6
-1.4
3.9
7.5
-2.7
4.4
8.5
-3.1
3.3
8.3
-2.5