London (PRWEB) November 28, 2013
The Latin American region is expected grow at an average rate of 3.5% in 2013. A fall in global demand and commodity prices has hit the region badly. However, governments in the region are making efforts through trade alliances and stimulus packages, to spur the growth in the region. Trans-Pacific trade alliance talks, which are likely conclude in the second half of 2013, act as a growth driver for Chile and Mexico. Similarly, the Colombian Government’s $2.7 billion stimulus package can build the growth momentum in the region. Falling US and Chinese imports, the two main markets for the Latin American economies, is a concern at the moment.
-The export-centric Latin American region experienced an overall sluggish growth in Q1 2013 due to weak global demand, a strong currency and supply bottlenecks.
-Growth in export driven industrial and economic activities in the region is expected to remain low till Q2 2013 due to persistent recession in Europe and sluggish growth in China, which are Latin America’s prominent export markets.
-Governmental efforts are likely to accelerate the growth momentum in H2 2012, owing to social welfare and infrastructure related stimulus packages, especially in Colombia.
-Foreign trade is expected to escalate in the latter part of the year due to strengthening of existing trade alliances such as Pacific Alliance and formation of new trade alliances such as the Trans-Pacific Partnership (TPP). The main focus of these treaties is to promote trade with Asian economies, in order to boost productivity amidst concerns of slowdown in the commodity boom.
Slowdown in macroeconomic fundamentals notwithstanding, the outlook for Emerging Latin America for 2013 remains relatively positive, subject to volatility and uncertainty.
The new government is pushing reforms in sectors such as telecommunications, energy, and power, which will most likely keep up the growth momentum in the coming quarters outweighing the counter effects of low exports to US.
Colombia’s initiative of opening up its oil and gas sector to private investment has paved the way for heavy inflow of investment into the sector which might act as a stimulus for growth amidst rising security issues in the region.
Chile’s power crisis can pose a great threat to the country’s industrial output, which is already constrained due to lower export demand and strong currency. However, up coming investments in renewable energy might be a silver lining for the world’s biggest copper producer.
-Chile’s anticipated participation in the Trans-Pacific Partnership is most likely to give its exports a much needed impetus.
-Growth in Chile’s mining sector is likely to be challenged by persistent European recession, sluggish Chinese growth, and an umbrella regulation put up by the Chilean government which has been responsible in the delay of certain projects due to juridical uncertainty.
-The Mexican Government has opened up the country’s telecom sector for private participants, dissolving the disruptive monopolies present in the sector. The government is also planning to open up the state-run energy sector for private participation, which will boost the growth momentum in the coming quarters.
-The Colombian manufacturing sector is facing constraints due to a strong peso. Oil and mining, the two key sectors are also suffering due to falling commodity prices and delayed investments.
-US-Colombian Open Skies agreement is expected to expand investment in country’s trade and tourism sectors in the coming quarters.
-Overall investor confidence in Latin America is low due to lower than expected growth for the first quarter and heavy reliance on external liquidity rather than domestic demand.
-Mining, the key growth sector of Latin America, reported a sluggish growth for Q1 2013, owing to increased commodity prices and delayed investments. However, the scenario is expected to change from H2 2013 onwards, as the region is expected to receive investment up to $xx billion in mining by 2020, which is almost xx% of the global mining investment.
Likely Industry Developments
-New investments are concentrated in renewable energy, automotive, oil and gas, and agro based industries in Latin America.
-Infrastructure development remains a top priority especially in Brazil due to two big upcoming international events i.e., the Football World Cup and the Olympics.
Growth Drivers for Industry
-Exporters are slowly exploring other international markets apart from the United States, thus, enhancing diversification for their respective economies.
-Smartphone subsidies are driving growth in the telecom sector. With mobile subscriptions expected to reach 200 million by the year end, investments into the sector are likely to increase substantially in the next two to three quarters.
Regional Insights and Trends—Emerging Latin America
Conclusion and Key Takeaways
The Frost & Sullivan Story
Read the full report:
For more information:
Research Advisor at Reportbuyer.com
Tel: +44 208 816 85 48