YPO Global Pulse Survey: Economic confidence in Latin America climbs to three-year high

Economic outlook in Latin America improves among YPO business leaders

Por Young Presidents Organization, Inc.

07 de fevereiro de 2017 | 03h18

SÃO PAULO, 7th February 2017 - For the third consecutive quarter, economic confidence in Latin America increased. YPO chief executives in the region are now more positive about business and economic conditions than at any time since January 2014. The YPO Global Pulse Index for Latin America, which tracks economic confidence levels among chief executives in the region on a quarterly basis, climbed 2.4 points to 58.3.

This uptick was primarily driven by a more positive outlook among chief executives in Mexico, who reported a jump of 7.7 points in economic confidence, despite the possibility of more stringent trade policies from the United States. The YPO Global Pulse Confidence Index for Mexico surged to 62.6, its highest level for nine months.

Confidence in Brazil, which has the highest weighting in the region, edged down 1.5 points to 55.1, but the country remains significantly more confident than it was 12 months ago, when it was languishing in deeply pessimistic territory at 41.9.

Elsewhere in the region, Colombia reported an improved outlook, gaining 5.6 points to 63.5, while economic confidence in Peru increased 2.5 points to 69.3, making it the most confident country in Latin America. Ecuador also saw a sharp jump in confidence, climbing 5.7 points to 48.2, its highest level since April 2015 and close to optimistic territory above the 50-point mark. 

Globally, the YPO Global Pulse Index for the fourth quarter of 2016 climbed 3.0 points to 62.2, its highest level for two years. The United States was the most confident region in the world, climbing 4.2 points to 64.6, its highest level since January 2015. Confidence in the European Union remained steady, edging up 0.2 point to 60.9. Asia gained 1.2 points to 61.2. Elsewhere, confidence in the Middle East and North Africa jumped 5.6 points to 59.5. Africa reported a 0.8-point decline, landing at 54.7, making it the second least confident region in the world after non-EU Europe, which increased 2.5 points to 54.3.

"It's encouraging to see a more positive outlook among chief executives in most countries across the region. In Brazil the picture is vastly improved from where it was 12 months ago, despite a modest decline, which reflects the adjustment in the expectation of the speed for a solid economy recovery," said Felipe Mendes, Managing Director of GfK, Brazil and a member of the YPO São Paulo Chapter. "Business leaders across Latin America hope conditions will continue to recover in the first half of 2017, but they will be wary of the potential impact of changes to U.S. trade policies, which could hit the region hard, on both trade and currency fluctuations."

Key findings in Latin America

Economic conditions set to improve further

Chief executives in Latin America predicted that the economic and business climate would improve in the next six months. More than half (55%) of chief executives expected economic conditions to improve over this period, a significant upturn from the previous quarter. Less than a quarter (21%) predicted that the economic climate would deteriorate in the first half of 2017.

Improved outlook for sales, hiring and investment

Business leaders in Latin America reported increased levels of confidence in each of the three main indicators of the YPO Global Pulse Index: sales, employment and fixed investment.

For the region, the YPO Sales Index climbed 3.8 points to 66.6, with 72% of chief executives in the region predicting increased revenues over the next 12 months, while only 6% expected their turnover to decline. Similarly, the YPO Employment Index rose 3.4 points to 54.9, as almost one-third (29%) of chief executives in the region expected to increase the size of their workforce in 2017, compared with 7% who expected to reduce their headcount. Importantly, the YPO Fixed Investment Index remained relatively steady at 57.1. Looking ahead 12 months, 42% predicted increased levels of investment versus 12% who expected to cut investment spending.

 Key findings in Brazil

Chief executives in Brazil still optimistic about short-term prospects

Having reported drastically improved levels of confidence over the previous four quarters, the outlook in Brazil remained relatively steady for the final quarter of 2016. Despite a marginal dip in confidence, business leaders were still generally optimistic about the economic climate and prospects for their own organisations in 2017.

Over the next six months, 70% of business leaders expected business and economic conditions to improve, with only 10% predicting that the economic climate would deteriorate.

YPO Global Pulse Confidence Index

The quarterly electronic survey, conducted in the first two weeks of January 2017, gathered answers from 1,514 YPO chief executive officers across the globe, including 125 in Latin America. Visit www.ypo.org/globalpulse for more information about the survey methodology and results from around the world.

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