CURRENT ACCOUNTS AND FOREIGN EXCHANGE RESERVES IN 2012
(in billions of $US)
Latin America
Argentina
Brazil
Chile
Colombia
Ecuador
Mexico
Peru
Venezuela
CURRENT ACCOUNT BALANCE
2011 2012
- 38. 4 - 89. 6
4. 3 3. 5
- 48. 8 - 76. 2
- 1. 9 - 10.0
- 11. 7 - 12. 8
- 1. 3 - 1. 4
- 7. 7 - 13.0
- 4. 8 - 6. 5
33. 6 26. 8
FX RESERVES
2011 2012
692.8 712.3
45. 1 42. 1
349.1 354.1
39. 7 39. 7
32.0 34.0
3. 3 2. 8
144.0 159.0
49.0 52.0
31.0 29.0
practical purposes, its reserve position is now equivalent to 18 percent
of GDP—more than double the ratio seen in September 2008.
That said, the pace of accumulation of FX reserves in Latin America will moderate substantially in
2012, following the current trend
of deterioration in current account
balances [see table]. The region’s
aggregate current account deficit is
expected to widen from $38 billion
in 2011 to $90 billion in 2012 amid
lower commodity prices, while the
relative resilience of domestic consumption and investment should
prevent a comparable decline in imports. As a result, the region’s FX reserves are expected to increase by
only $20 billion this year, with Argentina, Ecuador and Venezuela seeing reserve losses as they deal with
conflicting policy objectives.
In terms of financing, FDI in-
flows are still projected to fully
cover current account gaps in Chile,
Mexico and Peru. Visibly slower
growth will curb the gap in Argen-
tina, which other wise will need
to be covered by FX reserve losses
or by a policy change that priori-
tizes accessing capital markets in-
stead of paying down debt on a net
basis. In turn, portfolio and debt
flows should provide the financing
for Brazil and Colombia. These bal-
ance-of-payments dynamics suggest
that Latin currencies will not face
the same pressures on appreciation
seen over the past two years.
Luis Oganes is head of Latin America research at J.P. Morgan.
Education
CHILE’S STUDENTS DEMAND REFORM
GREGORY ELACQUA
Chile’s educational success over the past two decades would seem to be a model for the
region. Ironically, it was precisely
those advances—and the problems
they created—that led Chilean students into the streets in May last
year to call for an overhaul of the
country’s higher education system.
AMERICASQUARTERLY.ORG
Chilés high school graduation
rates have increased (almost 90 per-
cent of 25- to 34-year-olds hold high
school degrees, versus less than 40
percent of 55- to 64-year-olds), and
access to higher education has
greatly expanded over the past 20
years. More than 1 million students
are enrolled today in postsecondary
institutions, compared to less than
250,000 in 1990. At the same time,
national and international tests
point to significant improvements
in the quality of Chile’s primary
and secondary schools. The socio-
economic achievement gap also has
narrowed. Today, 7 of 10 Chileans at-
tending university are the first gen-
eration in their families to do so.
125 Americas Quarterly WINTER 2012
