Deutsche Bank Sees Greater Latin America Contribution to Global Growth

Latin America’s contribution to global growth will rise to 9% this year from the 8.4% average in 2009-11, according to a report from Deutsche Bank. The bank expects the region to show strong and stable growth generally this year thanks to supportive demographics and balanced fiscal policies, with gross domestic product (GDP) growth accelerating to 3.9% in 2014.

But while Chile, Colombia and Peru will continue to deliver stable growth, Brazil’s growth will remain disappointing unless more effective steps to boost investment and competitiveness are taken. As for Argentina and Venezuela, Deutsche Bank forecasts a continuation of high inflation, loose policies, political risk and social unrest during 2013.

Emerging Markets

Although the share of global GDP in developed markets (DMs) and emerging markets (EMs) is broadly balanced (52% compared to 48%), the latter will remain the engine for growth in 2013, Deutsche Bank said. At 5.4%, over 80% of global growth in 2013 will come from EMs, with 62% from EM Asia alone (39% from China and 5% from India).

In turn, the CEEMEA region (Central Eastern Europe, the Middle East and Africa), will expand 3.5% this year; accounting for 12% of global growth.

In DMs, only the US will make a significant contribution. The bank forecasts DMs and US growth at 1% and 2%, respectively, in 2013, while global growth is projected as 3.2% this year compared with 2.9% in 2012.

“2013 will likely mark the dawn of the post-crisis era,” states the report. “While structural long-term issues such as high debts across the developed world and unbalanced growth models in emerging economies remain unsettled, 2013 could be a year of stabilisation after years of crisis fighting. Supporting this view is the fact that global growth appears to be bottoming out and looks set to begin a slow ascent back to trend levels in the second half of 2013.”

And while a return to stronger growth in US and Europe will increase DMs’ contribution, EMs will still account for around 75% of growth in 2014, according to the report.

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