Investor Report Andean Region: Digging deep

Sep 1, 2012

The high-growth Andean economies of Bolivia, Colombia, Ecuador and Peru must ramp up infrastructure investment if they are to harness the full extent of their natural resource wealth

By Lucien Chauvin

The Andean Community, a four-nation bloc formed by Bolivia, Colombia, Ecuador and Peru, will lead economic growth in South America this year.

Rich in natural resources, the four countries will grow at rates well above the international level thanks primarily to raw material exports.

GDP in Peru expanded by an annualized 6% in the first quarter of the year, while Bolivia expanded by 5.2%, Ecuador by 4.8% and Colombia by 4.7%. Inflation in the four countries began falling in June, and governments are predicting that 2012 will see the lowest inflation rates in years.

Annual growth forecasts initially were higher, but finance ministries have been lowering their forecasts due to the continuing slump in European economies, the tepid recovery in the US and concerns about an economic slowdown in China. Export revenues are falling. The Peruvian government had forecast $50 billion in exports this...

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“The crisis has been a setback for reserve diversification."

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