The Pacific Pumas

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.[3]

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,[4] and just like the Tigers, the Pumas adopted a model based on macroeconomic stability and global integration, with a particular focus on East Asia.[5] 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.[6] 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.[7]

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.[8] This growth has allowed the four countries to make inroads against poverty, without sacrificing their business-friendly disposition.[9] 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.[10]

The Pacific Pumas have been early adopters of managed currency floats,[11] 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 global financial crisis that began in 2008. 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.[12]

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.[13]

Positive economic developments have seen returns in terms of investor interest. The Pumas attract four of every ten dollars invested in Latin America.[14]

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)	Inflation percent(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)
Chile	17.40	21	5.42	3.61	1.73	5.00	6.88	1	1	1
Colombia	48.2	27	5.05	6.59	2.22	4.47	6.43	3	6	4
Mexico	120.1	29	3.39	5.72	3.60	3.58	6.75	4	3	6
Peru	31.42	29	7.28	4.83	2.81	5.43	7.38	2	5	2

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.[15] Politically, the four countries have been observing the "rules of the game".[16] 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.[17]

The Pumas’ democratic maturation is still ongoing, with crucial Mexican reforms, potential Chilean Constitutional Reforms,[18] and the Colombian peace process[19] 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.[20]

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.[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,[22] and their combined global trade with the rest of the world totaled US$1.04 trillion in 2013.[23]

Additionally, the Pumas are moving forward with trade liberalization at a time when World Trade Organization dialogues have stalled.[24]