The Latin American chemical industry has enjoyed both a global recovery in petrochemical markets and sustained regional economic gains. The good times have fostered an enthusiasm for regional expansion plans. Major economies with large chemical enterprises in Latin America have experienced two successive years of solid economic growth. According to IMF, Brazil, Latin America 's largest economy, posted 4.9% gross domestic product (GDP) growth in 2004, over 3% growth in 2005 as well as 2006. Mexican economy grew by 3.0% in 2005 and 3.5% in 2006. After expanding by 9.0% in 2004, Argentina 's economy grew by another 7.5% in 2005 and 4.2% in 2006. Chile saw 6.1% GDP growth in 2004 and 5.9% in 2005, and 5.8% in 2006. Venezuela 's economy grew 17.9% in 2004, 7.8% in 2005 and 4.5% increase in 2006.
Latin America that has consumption of 8.6 million tons of both Polyethylene (PE) and Polypropylene (PP) presently, is likely to see consumption grow at about 5% in the coming few years. PE saw a growth of 4% while PP grew at 7 % in 2006. Three major consuming countries are Brazil with 3.25 million ton consumption, Mexico with 2.46 million ton consumption and Argentina with 0.7 million ton consumption. These three countries are expected to consume almost 6.4 million tons in 2007, and would account for 75% of the total consumption in Latin America . More than 70% of production of PP and PE grades in this region of the world is in the hands of six players lead by Braskem with 1.25 million tons capacity of PE and 0.65 million tons of PP. The Latin America's producers of PE and PP expect to see a surplus coming very shortly that they would have to export to Asia which is growing faster compared to its traditional markets in North America and Europe.
Customer needs for cost-effective, high-performance compounds in specific technical applications, as well as the demand for capabilities that can enable advanced production, will continue to fuel the growth of Engineering Compounds, which is expected to exceed that of polymers. Demand for engineering compounds is currently lower in Latin America and the Pacific region as compared to Europe and USA . However, as with most polymers, the growth rate for Engineering Compounds in these emerging regions of the world is estimated to surpass 10% pa in the years to come.