Highlights
- Latin American LNG imports will suffer a double-digit decline in 2016
- Australian LNG arriving in Latin America will worsen the region's glut of the fuel
- Gas prices in western Canada have collapsed as demand weakens amid growing oversupply
- The fate of Sabine Pass's commissioning cargoes is a sign of the challenges ahead for US LNG
Economic overview
Brazil’s continuing economic and political troubles are denting business confidence and deterring investment in the country’s oil and gas sector.
Investors remain jittery about Brazil as political turmoil continues over the impeachment of President Dilma Rousseff, who is accused of breaking budget rules to support her 2014 re-election bid. In April, a congressional committee recommended the president be impeached, following which Rousseff suffered a crushing defeat in the lower house of Brazil’s National Congress. The Federal Senate is expected to vote in May on whether to put Rousseff on trial. Some investors take the view that a successful impeachment will accelerate economic recovery.
Quarterly and annual year-on-year GDP growth rates
| Q2 2015 | Q3 2015 | Q4 2015 | 2016 | 2017 | 2018 | |
| US | 2.7% | 2.1% | 2.0% | *2.6% | *2.6% | *2.7% |
| Canada | 1.1% | 1.1% | 0.5% | *1.7% | *2.1% | *2.3% |
| Mexico | 2.3% | 2.6% | 2.5% | *2.6% | *2.9% | *3.2% |
| Brazil | -3.0% | -4.5% | -5.9% | *-3.5% | *0.0% | *2.4% |
| Argentina | 3.9% | 3.5% | 0.9% | *-0.7% | *0.0% | *0.1% |
Brazil is in a deepening recession. The country’s GDP shrank by 5.9% on an annual basis in Q4 2015 – its seventh consecutive quarter of contraction. The International Monetary Fund expects the Brazilian economy to contract by 0.5% on an annual basis in 2016. It previously forecast a 0.3% contraction.
In North America, Canada continues to feel the pinch of low oil prices. The Canadian economy grew by 0.5% on an annual basis in Q4 2015 – much lower than the 2.4% growth seen in Q4 2014. Weak oil prices and delays to Canada’s LNG projects have deterred investment in the oil- and gas-rich Western Canada Sedimentary Basin (WCSB).