The Pacific Pumas are a political and economic grouping of countries along Latin America’s Pacific coast that includes Chile, Colombia, Mexico and Peru. The term references the four larger Pacific Latin American emerging markets that share common trends of positive growth, stable macroeconomic foundations, improved governance and an openness to global integration.
The term was coined by political economist Samuel GeorgeDonnan, Shawn. “Pacific Alliance captures zeitgeist in era of ‘mega’ trade agreements”. Financial Times, 2014-04-1. in 2012, and developed in a 2014 study authored by George and published by the Bertelsmann Foundation entitled The Pacific Pumas: An Emerging Model for Emerging Markets.George, Samuel. “The Pacific Pumas: An Emerging Model for Emerging Markets”. Bertelsmann Foundation, 2014-03-12.
Overview The Puma, an American cat found along Latin America's Pacific Coast, is “rapid, agile, intelligent, independent, and strong”: qualities attributed to the Chilean, Colombian, Mexican, and Peruvian economies in the 21st century.Bhojwani, Deekpak. “The elephant and the pumas: India and the Pacific Alliance” The New Indian Express, 2013-05-21
The term was coined to emphasize that quietly and efficiently, Pacific Pumas have distinguished themselves from other large Latin American emerging markets in terms of economic growth and stability, commitment to democracy, and global integration. The name references the Four Asian Tigers of the 1990s whose successes the Pumas wish to emulate,Pardo, Pablo. "Los pumas ganan a los jaguares". Diario Las Américas. 2014-04-14. and just like the Tigers, the Pumas adopted a model based on macroeconomic stability and global integration, with a particular focus on East Asia.Freitas, Andrea and Lucianne Carneiro. "Mercosul pode rever estratégia com avanço da Aliança do Pacífico." O Globo. 2014-07-07. The term also suggests that the model of economic development and democratic governance adopted by the Pumas could be a model for global emerging markets more broadly.“La Alianza del Pacífico es modelo para países emergentes, según estudio". El País. 2014-03-14. In a Wall Street Journal feature, journalist Mary Anastasia O'Grady described the development model of the Pumas, in terms of a focus on openness, currency stability, fiscal restraint, and competition as "doing the heavy lifting" to ensure economic success.O'Grady, Mary Anastasia. "Latin America's Pacific Pumas". The Wall Street Journal. 2012-12-30.
Economic growth and stability Puma growth averaged 4.9 per cent annually from 2005 to 2013 in the four countries, compared to 4.4 percent in the Asian Tigers.International Monetary Fund Data, simple unweighted averages. October 2013. This growth has allowed the four countries to make inroads against poverty, without sacrificing their business-friendly disposition.George, 32. The Pacific Pumas have also distinguished themselves in terms of their macroeconomic stability. Inflation has been held within central bank bands across the four economies, with average annual inflation below 3 percent since 2009, and ranging from 1.73 per cent to 3.60 percent in 2013 across the four countries.International Monetary Fund Data. Inflation, Average Consumer Prices (unweighted). October 2013.
The Pacific Pumas have been early adopters of managed currency floats,Roberto Frenkel and Martín Rapetti. “A Concise History of Exchange Rate Regimes in Latin America.” Center for Economic and Policy Research, April 2010, 23. meaning that domestic currency conversion rates are allowed to fluctuate based on market impulses. Central banks help guide or stabilize movements via foreign exchange interventions, such as calls or puts on US dollars, or swaps that offer hedges without committing reserves.
The flexible rates have allowed the Pumas to absorb shocks to their real economies, perhaps best evidenced during the 2008 financial crisis. By January 2009, Chilean, Colombian and Peruvian currencies had all fallen sharply against the dollar as investors rushed to perceived safety. Such pressure has previously proven disastrous in emerging markets where rigid currencies and brittle monetary systems ultimately cracked under stress, including during the 1997 Asian financial crisis. However, with the flexibility of the float, Puma central banks were not forced to exhaust reserves defending pegs, nor were they forced to gamble against speculators betting on devaluations. The Pumas absorbed the rapid depreciation and rebounded swiftly.Rojas-Suarez, Lilliana. “The International Financial Crisis: Eight Lessons for and from Latin America.” Center for Global Development Working Paper No. 202, January 2010. Available online at https://ssrn.com/abstract=1543451.
The governments have also demonstrated a commitment to debt reduction and fiscal restraint. For example, Chile has effectively eliminated its public debt while Peru transformed its structural deficits into structural surpluses.Pardo, Pablo. "Los pumas ganan a los jaguares". Diario Las Américas. 2014-04-14.
Positive economic developments have seen returns in terms of investor interest. The Pumas attract four of every ten dollars invested in Latin America.Margolis, Mac. “Latin America’s New Mr. Right”. BloombergView. 2014-06-19.
Country Population millions (2014) Population Aged 0–14 percent (2014) Average GDP growth 2004-2013 (excluding 2009) percent (2014) Average Export growth 2004-2013 percent (2014) Inflationpercent(2013) Average Private Consumption Growth forecast 2013-2018 percent (2014) Average Gross Fixed Investment Growth forecast 2013-2018 percent (2014) Ease of Doing Business Rank (Latin America)(2013) Competitiveness Rank (Latin America)(2013) Macroeconomic Environment Rank (Latin America)(2013) 17.40 21 5.42 3.61 1.73 5.00 6.88 1 1 1 48.2 27 5.05 6.59 2.22 4.47 6.43 3 6 4 120.1 29 3.39 5.72 3.60 3.58 6.75 4 3 6 31.42 29 7.28 4.83 2.81 5.43 7.38 2 5 2
Improved democracy The Pacific Pumas have also distinguished themselves in terms of improved democracy and governance, both from other countries in Latin America as well as other emerging markets around the globe.EFE. “La Alianza del Pacífico es modelo para países emergentes, según estudio". El Pais (Colombia). 2014-03-14. Politically, the four countries have been observing the "rules of the game".George, Samuel. "Guest Post: LatAm's Pacific Pumas". The Financial Times. 2013-05-20. All four countries have executed peaceful political transitions from right-leaning to left-leaning governments (and vice versa) in the past decade. Leaders, both left and right, have governed moderately, generally respecting executive restraint.George, 14-19.
The Pumas’ democratic maturation is still ongoing, with crucial Mexican reforms, potential Chilean Constitutional Reforms,“All shall have rights”. The Economist. 2014-03-15 and the Colombian peace process“Colombia: Profile” BBC. 2014-01-31. still on the horizon. The improved governance has however, played a factor in the Pumas taking the top places among Latin American nations in the World Bank’s 2014 Ease of Doing Business survey.Luxner, Larry. “Diplomats in Washington tout the emerging ‘Pumas of the Pacific’” Tico Times. 2014-03-28.
Global integration The Pacific Pumas have actively pursued real integration in Europe, East Asia and the Americas—and approach that has provoked comparisons to the Asian Tigers.“Pumas del Pacífico, version latina de ‘tigres asiáticos’” Portafolio. 2013-05-21. Individually the Pumas have free-trade agreements (FTAs) with the United States, the European Union and various countries of Pacific East Asia. The four Pumas account for over 50 percent of Latin America’s trade,Bhojwani, Deekpak. “The elephant and the pumas: India and the Pacific Alliance” The New Indian Express, 2013-05-21 and their combined global trade with the rest of the world totaled US$1.04 trillion in 2013.Donnan, Shawn. “Pacific Alliance captures zeitgeist in era of ‘mega’ trade agreements”. Financial Times. 2014-04-1
Additionally, the Pumas are moving forward with trade liberalization at a time when World Trade Organization dialogues have stalled.“Los Pumas de la Alianza del Pacífico” Semana, 2014-06-21.
The Pacific Pumas and the Pacific Alliance The Pacific Pumas consist of the founding members of the Pacific Alliance—a trade and integration pact founded in 2012. The Pacific Pumas refers both to the individual advancements and opportunities of the four countries and to broader global potential of the four together. Thus, the concept encompasses more than simply the Pacific Alliance.Maseri, Sergio Gomez. “Informe destaca buen momento de los países de la Alianza Pacífico”. El Tiempo. 2013-05-13.
On February 10, 2014, the Presidents of the four countries met in Cartagena, Colombia, for the VIII Summit of the Pacific Alliance, and formally signed agreements eliminating tariffs on 92 percent of the trade between them.EFE. “La Alianza del Pacífico es modelo para países emergentes, según estudio". El Comercio.com. 2014-03-13. The remaining 8 percent of trade is expected to be gradually liberalized over the next few years,Muñoz, Sara Schaefer. “Latin Countries Form Trade Accord With Eyes on Asia”. Wall Street Journal. 2014-02-10. with the majority of this 8 percent covering “sensitive” sectors such as coffee, bananas, and sugar.Fadda, Gustavo. “Paso trascendente de los Pumas del Pacífico". La Voz. 2014-02-16.
The fact that the Alliance members are not significant trading partners with each other suggests that benefits beyond trade liberalization exist among the four Pumas. The Alliance is also dedicated to creating MILA, an integrated stock exchange.George, Samuel. "Pacific Alliance Partners set sights on Asian Tiger-status". The Financial Times. 2014-04-01.
At the IX Summit of the Pacific Alliance, the topic of potential integration of the Alliance with Mercosur was expected to be breached. Such integration would face challenges due to the differences in approach to trade liberalization between the two blocs.George, Samuel. "Guest post: Mercosur and the Pacific Alliance – do opposites attract?" The Financial Times. 2014-06-13.
The Pacific Pumas and transatlantic relations The Pacific Pumas positive disposition towards democracy and integration make the four countries potential partners for both the European Union and the United States. The United States joined the Pacific Alliance as an observer in July 2013, and remains a crucial trade partner for the Puma economies. Mexico alone has sent an annual average of 82 percent of its exports to the United States since 2002, while Colombia shipped 39 percent of its exports to the United States between 2010 and 2012.George, Samuel. “The Pacific Pumas: An Emerging Model for Emerging Markets”. Bertelsmann Foundation, 2014-3-12. Combined, the Pumas are the EU’s eighth largest trading partner, surpassing both Brazil and India.
The Pacific Pumas and Asia The name Pacific Pumas also alludes to the quartet’s goal of expanding economic relations with emerging East Asia.Fadda, Gustavo. “Paso Trascendente de los Pumas del Pacífico”. La Voz. 2014-02-16. Chile, Mexico, and Peru are active participants in negotiations for the Trans-Pacific Partnership. At the presentation of the Pacific Pumas study on March 13, Mexican Ambassador to the United States Eduardo Medina Mora emphasized that the group of four countries can act as a “Bridge to Asia.” Eduardo Medina Mora, Mexican Ambassador to the US. Commentary on the Pacific Pumas. 2014-03-13. Available at https://www.youtube.com/watch?v=XL52ZqBma8Y