Brazil, Argentina lead growth in Latin America, South America

Industrial Distribution staff -- Industrial Distribution, 12/18/2007 7:19:00 AM

The outlook for Latin America is generally solid despite projected slowdowns in overall growth through 2008, according to the Manufacturers Alliance/MAPI Latin America Outlook: 2007-2008.

The bi-annual report focuses on Brazil, Argentina and Mexico, which are responsible for more than 80 percent of the region’s manufacturing output.

Manufacturing production in Latin America expanded at a 4.3 percent annual rate in 2006, but growth is expected to moderate to 3.9 percent in 2007 and to 3.8 percent in 2008.

Brazil and Argentina are ahead of Mexico in maintaining growth, according to the report. Brazil has benefitted from improved credit conditions and a steadily rising demand. In addition to Mexico’s weak peso policy, the growth of domestic demand has helped Argentina.

Mexico, however, remains closely linked to United States producers, meaning a slowdown seems inevitable, MAPI found.

The forecast predicts a more balanced scenario among the countries in 2008, though prospects will continue to remain brighter for Brazil and Argentina.

Food and beverage, motor vehicles, machinery and equipment are the dominant industries in the three nations, making up roughly 40 percent to 45 percent of the region’s manufacturing.

Food and beverage production is expected to expand by 4.1 percent in 2007 and 2008. Automotive growth is projected at 6.3 percent in 2007 and 6.1 percent in 2008, as Brazil and Argentina reach record-high production levels. Mexico’s automotive industry has been slowed by declining U.S. demand.

The machinery and equipment industry should increase production by 13.9 percent in 2007 and 8.1 percent in 2008, primarily due to the strong activity anticipated in Brazil.

The fastest-growing sectors are expected to be office, accounting and computing machinery and the non-auto transport equipment.