2004 consensus forecast: growth and free trade are suddenly back on the agenda. Latin America's leader face some big challeges to turn good fortune into solid progress.

Whatever else happens in a world where terrorism, recession and war are commonplace, the year ahead is shaping up as the year when trade suddenly mattered.

Take a look at Mexico. Just short of 10 years after the start of the North American Free Trade Agreement, President Vicente Fox has his hands full trying to maintain the country's competitiveness. China is snatching market share north of the border, while smiled reforms at home are hogtying local industry's ability to compete. If the country's economy is to grow in lockstep with the U.S. recovery in 2004, as pre dicted by the LATIN TRADE Consensus Forecast, Fox faces pressure to fix things.

Brazil's celebrated leftist President Luiz Inacio Lula da Silva, meanwhile, finds himself in the unusual position of selling his country to neighbors across the Amazon basin, doling out help in the form of big infrastructure projects, off deals and talk of expanding the Southern Common Market, known as Mercosur. Of course, Brazil's trade with its Latin American brethren represents only a fifth of its total trade with the world. Ultimately, Lula is seeking the support of South American countries to strengthen Brazil's bargaining position with the rest of the world.

Argentina reflects one of the challenges facing Brazil's plan for South America. The longtime partner in Mercosur is still digging out from its historic default of 2001, and more free trade within South America will not suffice. With the peso hugely devalued, Argentina is signing trade deals with any taker to expand access for its exports to more markets around the world. Internally, however, President Nestor Kirchner faces financially exhausted voters and extremely weary foreign utilities investors. How he handles their conflicting demands will be a severe test.

CONSENSUS FORECAST

          '02 GDP  '02 GDP     '02        REAL GDP        INFLATION
            US$  per capita POPULATION    % change         % change
          billion    US$     million  2002 2003E 2004F 2002 2003E 2004F

ARGENTINA   103.0   2,718     37.9   -10.9   5.5  3.8  41.0  8.4  9.3

BRAZIL      448.7   2,563    175.1     1.5   1.6  3.1  12.5 11.9  7.4

CHILE        66.4   4,256     15.6     2.1   3.4  4.3   2.8  3.1  3.1

COLOMBIA     71.2   1,626     43.8     1.7   2.2  3.1   7.0  6.3  5.7

ECUADOR      24.5   1,869     13.1     3.4   2.6  3.0   9.4  7.0  5.5

MEXICO      636.8   6,255    101.8     0.9   1.9  3.6   5.7  3.9  3.7

PERU         54.8   2,052     26.7     5.2   3.8  3.7   1.5  2.3  2.4

VENEZUELA    94.3   3,757     25.1    -8.9 -13.3  7.4  31.2 42.5 34.2

            EXCHANGE RATES      CURRENT ACCOUNT   INT'L RESERVES
            end of period       %  of GDP         US$ billion
            2002 2003E 2004F   2002 2003E 2004F   2002 2003E 2004F

ARGENTINA   3.36  2.91  2.92   9.2   6.9  5.7    10.5   12.7  14.6

BRAZIL      3.53  3.18  3.37  -1.7  -0.8 -1.4    37.8   45.9  42.8

CHILE        720   705   712  -0.8  -0.9 -1.1    15.4   15.0  15.4

COLOMBIA   2,867 2,926 3,148  -2.0  -2.2 -2.3    10.7   10.9  10.9

ECUADOR     1.00  1.00  1.00  -4.8  -4.4 -4.8     0.7    1.0   1.0

MEXICO     10.37 10.69 10.97  -2.2  -2.4 -2.6    50.6   53.4  54.6

PERU        3.51  3.56  3.62  -2.0  -2.0 -2.2     9.3    9.9  10.0

VENEZUELA  1,389 2,139 2,785   8.5   9.4  8.3    14.8   14.8  14.3

E= ESTIMATE  F = FORECAST

GREG BROWN * MIAMI