Newswire: Latin America

Latinamerica foreign trade forecasted to contract 9 to 11% in 2009
The main impact for Latinamerica of the global financial crisis and economic slowdown has been the contraction of trade, so far in the range of 9 to 11%, revealed Alicia Bárcena, Executive Secretary of the UN Economic Commission for Latinamerica and the Caribbean, Cepal.

“The strongest impact we are seeing in the region is the fall in trade volumes. I believe that the “shock” of the contraction of global demand for our goods and services is our most relevant issue”, said Bárcena in an interview with the Cuban daily Granma.

She recalled that when the last big crisis Latinamerica’s foreign debt was equivalent to 24% of GDP, while in 2008 it had dropped to 8%.


Latinamerican Liberals hold congress in “Bolivarian” Venezuela
Liberal political parties and thinkers from Latinamerica are holding their annual congress this week in the Venezuelan capital Caracas. The event is in the framework of the 25th anniversary of the local branch Cedice-Libertad and will promote debates on liberal policies to address poverty and the current global slowdown.

...

The congress is bound to spark some reaction among President Chavez followers since his Bolivarian revolution and XXIst Socialism stand at the opposite end of the political spectrum from the Liberals and the concept of individual freedom.

The two events will be taking place during a particularly sensitive week since President Chavez has ordered the nationalization of oil industry subcontractors, banks, steel industry, food processors and farm land considered idle.


Foreign direct investment to Latam reached 139 billion USD in 2008
Direct foreign investments in Latinamerica and the Caribbean are showing a significant resistance to the global crisis and in 2008 reached a record 139 billion US dollars, up 9.4% from the previous year according the United Nations Conference on Trade and Development.


Latinamerica’s bicentennial independence festivities begin in Bolivia
Bolivia’s commemoration on Monday May 25th of the 200th anniversary of the first uprising in Latinamerica against the Spanish colonial empire will also mark the beginning of similar independence celebrations along the continent which will peak in 2010.


Third re-election running “inappropriate” admits Colombia’s Uribe
Colombia’s President Alvaro Uribe says it would be “inappropriate” for him to seek a third consecutive term. His statement comes two days after the Senate approved a referendum that would ask voters to permit him to run again. Uribe did not, however, clearly rule out a re-election bid.

China to launch iron ore trading platform - AP

China will launch its first iron ore trading platform next week in a move that may lead to setting up its own pricing index and possibly exerting more influence over import costs, an official and reports said Friday.


The Rizhao International Iron Ore Trade Center will begin providing electronic commercial services for iron ore suppliers and steelmakers on Monday, said Liu Qiang, sales manager of Shandong Huaxin Trading Co., which is heading the project.

The center, a joint venture by Shandong Huaxin and four other local companies involved in bulk commodity dealings, will handle electronic transactions, information exchange, quality inspection, storage, transport, insurance and trade settlement, Liu said.

The center will act as a clearinghouse for information on iron ore trading, Liu said.

"As it gains influence in the long-term, it may have some influence on price negotiations," he said.

Rizhao, a port in eastern China's Shandong province, is one of the country's biggest handlers of iron ore imports.

The trading platform would likely mainly serve China's numerous smaller steelmakers. They buy independently from the biggest mills and do not pay the same benchmark prices the big steelmakers agree to each year in sometimes tortuous negotiations with overseas miners like Brazil's Companhia Vale do Rio Doce SA and global miner Rio Tinto Group.

Meanwhile, the annual negotiations with overseas iron ore suppliers dragged on, according to the government-affiliated China Iron & Steel Association, which vehemently denied reports that Chinese steelmakers had settled for 30 percent to 35 percent price cuts.

"China's steel industry and those of Japan and Korea are facing severe shocks from the global financial crisis," CISA said in a statement posted on its Web site. It said the annual negotiations were continuing on a basis of "mutual interest and long-term stability."

Unlike in previous years, when Shanghai-based Baosteel Group led the talks, this year CISA is handling the negotiations. Analysts say it is seeking at least a 40 percent cut in this year's benchmark prices.

China imported 444 million tons of iron ore in 2008 - half of the volume of all imports worldwide, according to government figures. Imports in January through April surged to 188 million tons, as traders took advantage of lower prices to build up stockpiles.


Iron ore pricing has long been a point of contention between China, the world's biggest steel producer and consumer, and foreign raw materials suppliers.

Such friction intensified in recent years as surging demand due to the booming economy and speculative buying drove prices for iron ore and other commodities higher.

But a slowing in industrial production due to the global economic crisis has raised expectations that Chinese and other steelmakers may win big concessions in this round of talks after yielding to demands for double-digit increases in ore prices in previous years.

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[Source] -- Associated Press researcher Ji Chen contributed to this report.

Latin America and Brazil -- Fellow Latam blog worth your time

China-South America: China now Brazil's largest Export Market



Latin America and Brazil [http://brazilandeconomics.blogspot.com] is a great site / blog ran by a very intelligent lady by the name of Victoria Saddi, a former senior Latin America economist at RGE monitor.

Here are a few excerpts from her recent piece of China & Brazil. Click on the various links throughout this post to access her site and the full article directly.

Brazil posted a trade surplus of $ 3.71 billion in April, a significant increase when compared to the surplus posted in March.

The main news on the trade front is the fact that China became the leading destiny for Brazilian exports. Besides that, the trade between both countries reached $3.2 billion in April. In contrast, trade between Brazil and the United States reached $2.8 billion in the same period. In the year until April, trade between China and Brazil reached $10.2 billion, compared to $8.9 billion in the same period last year. Clearly, the fact that China is expected to grow 7% in 2009 is explaining the good performance of Brazil´s trade with China.

So, why do we care about China and the fact that it has replaced the US as the leading market for Brazilian exports? The answer is because we believe that Brazil will not present a very severe recession in 2009 (with growth reaching 0.9%) mostly because of the strong ties between both countries. Export relationships are developed though time, it takes a while to open up and conquer markets. Brazilian exports to China have been increasing and improving since 1993.

Click here to access this article in its entirety from Victoria Saddi's website

China's currency swaps help expand yuan's reach -- Caijing

Li Tao and Zhang Man of Caijing, a financial news publication of China report on the rising influence of China's currency the Renminbi (yuan). The two write:

The cross-border exchange of regional currencies has become an important way to defend against the global economic downturn and promote trade. To circumvent a shortage of dollars and other currencies, as well as reduce exposure to exchange rate volatility, developing countries in eastern and central Asia as well as South America have implicitly recognized the Chinese yuan as a currency for settlements and, in some cases, reserves.

China is willing and eager to help ease liquidity in the financial system... as long as it gets some justified financial clout out of it.

So far China has established the following currency swaps:


Dec 12 - China and South Korea sign a 180 billion yuan currency swap framework agreement.

Jan 20 - China and Japan sign a 200 billion yuan currency swap between the People's Bank of China -- and the Honk Kong Monetary Authority.

Feb 8 - China signs a currency swap agreements with Malaysia's central bank for 80 billion yuan

March 11 - China signs a 20 billion yuan deal with the National Bank of Belarus

March 24 - China signs a 100 billion yuan swap deal with the Central Bank of Indonesia

Click here to read more on this topic from Caijing