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Latam survey reveals winners and losers within Latin America

ICE-LA Countries Jan 2013Enlarge Graph

The Brazilian Institute of Economy (IBRE) publishes a quarterly survey on the current and expected state of 18 countries across Latin America. The index is composed of two indicators, one measuring current perception of the economy and one measuring expectation six months out. A value of five is neutral, while values above and below represent expansion and contraction expectations, respectively.

ICE-LA Countries Jan 2013Enlarge Graph

The data shows the change since last quarter for several Latin American countries ranked by score. Both Peru (EPU) and Chile (ECH) led the pack and had increases versus the last quarter. Both countries had very strong growth rates last year and seem to be on track to further gains in 2013.

Other countries with strong growth rates last year, such as Mexico (EWW) and Colombia (GXG), did not come out as optimistic, though both posted values of at least five. Mexico’s value of 5 is actually very good compared to its long term average of 4.4 while Colombia’s, despite it being higher, is much lower than its 5.8 long term average.

Nonetheless, the region as a whole is showing an improvement signifying a recovery in economic situation. Furthermore, this is the first quarter since July 2011 that the overall index breaks above the 10-year average of 5.2.

Investors considering benefiting from the recovery in the region can invest in ILF or GML, which focus on the region as a whole. EEM and VWO, the most popular emerging markets ETFs, also have a 20% exposure to the region.

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