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LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Monday, July 2, 2018

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LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Monday, July 2, 2018 LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Monday, July 2, 2018 BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group ECONOMIC Devry Boughner Vorwerk Corporate VP, Global Corporate Affairs Will Macri’s New Brazil Slashes Cargill 2018 Growth Joyce Chang Global Head of Research, Cabinet Boost Forecast JPMorgan Chase & Co. A nationwide trucker strike in May Dirk Donath Senior Partner, the Economy? paralyzed key sectors of Latin Catterton Aimara America’s largest economy, but Marlene Fernández the central bank also cited an Corporate Vice President for easing of economic activity at the Government Relations, start of the year, as well as weak- Arcos Dorados ness in business and consumer Peter Hakim President Emeritus, confi dence indicators. Inter-American Dialogue Page 2 Donna Hrinak President, Boeing Latin America BUSINESS Jon Huenemann Vice President, U.S. & Int’l Affairs, Chile to Inject Philip Morris International James R. Jones $1 Bn in Codelco Chairman, Chile’s fi nance minister said Monarch Global Strategies Argentine President Mauricio Macri met on June 22 with governors of provinces in his Cambie- Friday the government will inject Craig A. Kelly mos coalition to discuss new cabinet changes, state news agency Télam reported. // Photo: $1 billion in “extraordinary” capi- Director, Americas International Télam. Gov’t Relations, Exxon Mobil talization into state-owned copper Argentine President Mauricio Macri has shuffl ed some of miner Codelco. John Maisto Director, U.S. Education his government’s top cabinet members in the wake of a Page 3 Finance Group plummet of the country’s currency. Finance Minister Luis Nicolás Mariscal Q POLITICAL Chairman, Caputo was tapped as the country’s central bank chief, Grupo Marhnos replacing Federico Sturzenegger. Engineer Javier Iguacel is taking over López Obrador Thomas F. McLarty III Chairman, as energy minister for Juan José Aranguren. And economist Dante Sica Wins Mexico’s McLarty Associates was named production minister, succeeding Francisco Cabrera. Why has Presidency Carl Meacham Associate VP for Latin America Macri’s government made the changes? Will the newly named offi cials Andrés Manuel López Obra- Int’l Advocacy Division, PhRMA bring a different direction to their respective departments? How much dor won a landslide victory in Carlos Paz-Soldan Mexico’s presidential election on Partner, success will Macri have at steadying Argentina’s economy now that the Sunday, claiming more votes than DTB Associates, LLP International Monetary Fund’s board has approved its $50 billion loan his three competitors combined. Beatrice Rangel package for the country? Director, His Morena party also appears to AMLA Consulting LLC have done well in Congress. Ernesto Revilla Page 2 Head of Latin American Paula Alonso, director of the Latin America and Hemispher- Economics, Citi ic Studies Program at The George Washington University: Gustavo Roosen “The gradual adjustment strategy implied risks from external Chairman of the Board, Envases Venezolanos A shocks and domestic doubts regarding credibility in both Andrés Rozental infl ation and fi scal targets. The currency crisis was a product of these President, Rozental & Asociados and Senior vulnerabilities and the resulting fall in growth expectations has made the Policy Advisor, Chatham House adjustment process more problematic. The government has replaced Roberto Sifon-Arevalo Managing Director, Americas its previous overly enthusiastic predictions with announcements of a Sovereign & Public Finance Ratings, Standard & Poor’s few months of recession ahead; growth for the year might be around 1.3 percent. The $50 billion IMF package, while politically costly, may en- hance credibility. This is also the objective of the reshuffl e of personnel. Former Minister of Finance Luis Caputo, now at the helm of the central bank, seeks greater confi dence with fi nancial markets. The reunifi cation López Obrador // Photo: López Obrador campaign. Continued on page 4 COPYRIGHT © 2018, INTER-AMERICAN DIALOGUE PAGE 1 LATIN AMERICA ADVISOR Monday, July 2, 2018 POLITICAL NEWS Eurasia Group analysts told clients that López NEWS BRIEFS Obrador’s large margin of victory suggests López Obrador Takes his party would have a strong position in both U.S. Judge Sides With houses and be able to attract support from Puerto Rico Hurricane Mexico’s Presidency smaller parties as well, Bloomberg News re- ported. Running with López Obrador’s Morena Evacuees in Mass. Hotels in Landslide Win party, Claudia Sheinbaum, an environmentalist, A U.S. district judge in Massachusetts on appears to have become the fi rst woman ever Saturday ordered federal emergency offi cials Andrés Manuel López Obrador won a landslide to be elected Mexico City’s mayor, a position to extend vouchers paying for temporary hotel victory in Mexico’s presidential election on López Obrador once held, with 47 percent of housing for nearly 1,700 Puerto Rican hurricane Sunday, claiming more votes than his three the vote, according to El Universal. “We have evacuees, the Associated Pres reported. On competitors combined, El Universal report- witnessed today a very profound reshaping of the eve of the program’s expiration, Judge Leo ed. In his third run at the presidency, López the country’s political map,” Goldman Sachs Sorokin said ending the vouchers could cause Obrador, or AMLO as he is popularly known, economist Alberto Ramos told Reuters. “The irreparable harm. He also said that evidence took nearly 54 percent of the vote, far ahead balance of power at the federal and local levels showed problems with the Federal Emergency of Ricardo Anaya of the PAN party, with 23 has defi nitely shifted to the left, with unclear Management Agency’s efforts to notify and percent, and José Antonio Meade of the ruling implications for the near-term policy direction.” provide transitional help for the hurricane PRI party, with 15 percent. “I’m very aware of It has been a “change year” in several Latin refugees. my historical responsibility,” López Obrador, American elections, with the youngest candi- 64, told cheering supporters in Mexico City’s dates in recent history winning presidential rac- central square, NBC reported. “I don’t want to es in Costa Rica and Colombia, the resignation Colombian Park in go into history as a bad president. Now we of Peru’s president over corruption allegations, are going to transform Mexico.” Earlier in a and an unpredictable election ramping up in Amazon Added to Latest speech to reporters, López Obrador pledged South America’s most populous country, Brazil. U.N. World Heritage List to seek “a relationship of friendship” with the Colombia’s Chiribiquete National Park on United States, with which Mexico is currently Sunday made UNESCO’s World Heritage List, renegotiating the North American Free Trade ECONOMIC NEWS Agence France-Presse reported. The United Agreement. The two countries have also been Nations agency said the Amazon-region park, at odds over border security and migration, with an area of 2.7 million hectares (6.7 million with U.S. President Donald Trump pledging to Brazil Slashes 2018 acres), will be the ninth world heritage listing in “build a wall” on the border that Mexico will Growth Forecast Colombia. The Andean nation’s president, Juan pay for. The fi rst high-level contact between Manuel Santos, said Sunday via Twitter that his López Obrador and the White House is likely to Brazil’s central bank last week slashed its government this week will expand the protect- be a phone call today, according to the report. forecast for gross domestic product growth for ed territory in the area by 1.5 million hectares, Trump tweeted his congratulations Sunday 2018, Reuters reported Friday. The government according to the report. night, saying, “There is much to be done that now sees GDP growth of 1.6 percent this will benefi t both the United States and Mexico!” year, compared to 2.6 percent previously. A Analysts have pointed out that the conserva- nationwide trucker strike in May paralyzed key tive Trump and leftist López Obrador, despite sectors of Latin America’s largest economy, Ecuador GDP Rises More their ideological differences, campaigned on but the bank also cited an easing of economic Slowly in First Quarter similar themes, catering to anti-intellectual or activity at the start of the year, as well as a xenophobic sentiments, capitalizing on existen- Ecuador’s gross domestic product grew 1.9 weakness in business and consumer confi - tial worries among middle- and working-class percent in the fi rst quarter as compared to dence indicators. Brazil’s unemployment rate populations who see their jobs being lost to the same period last year, América Economía remained at a 12.7 percent in May, state sta- technology or to lower-paid workers, Tracy reported Friday, citing central bank data. tistics agency IBGE said Friday. However, the Wilkinson and Kate Linthicum wrote in the Los However, the rate of growth fell of 0.7 percent composition of new jobs remains of low quali- Angeles Times today. Like Trump, López Obra- as compared to the previous quarter. The gov- ty, and formal salaried jobs are still contracting dor benefi ted from a strong current of outrage ernment’s expenditures increased 1.3 percent from a year ago, economists noted. Increases where many voters felt disenfranchised, left in the period, largely due to more spending on in jobs were driven chiefl y by the informal out or overlooked. While it will likely be a few education,
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