Latin American economies are showing a sharp V-shaped recovery from last year’s recession and, while growth is seen across the board, the drivers for the rebound differ, according to the Manufacturers Alliance/MAPI Latin America Manufacturing Outlook, a biannual analysis that examines the latest trends and provides a near-term forecast for 16 major industries.

The report, authored by Fernando Sedano, Ph.D., MAPI economic consultant, focuses on Latin America’s three largest economies – Brazil, Argentina, and Mexico – as these countries are responsible for more than 80 percent of the manufacturing output in the region. MAPI forecasts that overall manufacturing output in Latin America will grow 8.3 percent in 2010, a significant increase from the 5 percent advance forecast in the December 2009 report. The report anticipates that manufacturing production will decelerate to 3.7 percent growth in 2011.

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In developing its forecast, MAPI utilizes data from national statistical agencies, assigning weighted average annual production indexes for each industry. The weights are determined by a country’s sector value added in U.S. dollar terms, using MAPI’s proprietary econometric model.

Brazil’s manufacturing production is expected to surge a sizable 11.5 percent in 2010, underpinned for the most part by vigorous internal demand, and to a lesser extent by robust exports. In Mexico, manufacturing production will increase a more moderate 5 percent in 2010. Sedano writes that a U.S.-driven manufacturing upturn in Mexico is leading to immediate job creation with positive potential implications for consumer spending, raising the odds for a stronger rebound than previously anticipated. Argentina’s manufacturers are expected to increase their output levels by 6.8 percent in 2010 as its economy benefits from higher commodity prices as well as strong economic activity in China and Brazil.

The report anticipates that during 2010 manufacturing production in Latin America will surpass pre-crisis levels.

\”The performance of the automotive sector, which accounts for a large share of Latin America’s manufacturing, remains key to the outlook,\” Sedano said. \”Production is ramping up across countries and stimulating growth in a broad number of sectors. Food and beverages production continues holding up well and is in line with expectations. Machinery and equipment production – a major drag during last year’s downturn – is soaring as companies are investing to expand capacity to keep up with rising demand. As a result, industries such as basic metals and fabricated metal products, which supply the machinery and equipment and automotive sectors, are also expanding.\”

The report sees growth in 15 of 16 industries in 2010 and growth in all 16 industries in 2011. Three industries – food and beverages; motor vehicles; and machinery and equipment – account for roughly 40 percent to 45 percent of the region’s manufacturing and, therefore, are most important to the forecast.

Food and beverages production, the largest industry in the region and one of the most stable, should grow by 4.3 percent in 2010 and rise by 3.6 percent in 2011. The automotive sector is forecast to improve by 22.5 percent in 2010 and further grow by 5.7 percent in 2011. The machinery and equipment industry should increase production by 26.7 percent in 2010 and by 5 percent in 2011.