Exciting times are ahead for Latin America. The scenario for foreign investors is taking a turn for the better, after a series of turbulent years. The region is entering its third year of economic recovery, following a more stable path to growth.
Governments across the region are taking a more sober approach to fiscal policy, creating impressive opportunities for the private sector, including in big energy, infrastructure and construction projects. Over the last decades, these projects were led by massive public investment, a crucial step for propelling development in the region. Now, Latin American countries are increasingly seeking support from the private sector.
Recent political moves diminishing state participation in the economy reinforce this pattern. Except for Mexico, where the social democrat Andrés Manuel Lopez Obrador was elected, Latin America is experiencing a shift towards neoliberalism. In Brazil, Argentina, Paraguay, Chile, Peru and Colombia, governments are planning a wide-ranging round of privatizations and public-private partnerships.
The region has a few challenges around the corner. It will need to make a major leap in productivity, improving ineffective domestic services and tackling important issues like technology lag and structural bottlenecks in infrastructure and labour training. Special attention must also be paid to prevent inflationary spells.
But the vertiginous success of several startups in the region, most notably the Colombian delivery service Rappi and the Brazilian transport app 99, show that there is ample space for new business models and technologies. Several sectors are ready to enter a disruptive phase, which local populations often receive with open arms. For this reason, international companies and investors are beginning to look at Latin America with great interest.
2019 is a promising year for those who want to invest in Latin America. But understanding Latin America’s cultural diversity and the specificities of each country is a vital step in deciding where to invest.
Some aspects of the economic scenario for the coming year are as follows:
- Many infrastructure projects have been paralyzed in recent years as a result of corruption scandals involving large contractors such as Brazil’s Odebrecht. Several countries, including Brazil and Peru, are now trying to make up for lost time by launching a package of concessions and PPPs to enable the construction of airports, ports, railways, highways, public lighting systems, sanitation, among others.
- Following in the footsteps of OECD countries, Latin America is starting to rely more strongly on renewable energy sources, without abandoning its investments in petroleum enterprises. Brazil’s wind energy is gaining traction, second only to its notable hydroelectric energy matrix. In more arid areas of the subcontinent, such as northern Argentina and northeastern Brazil, giant solar power stations are already being implemented.
- Workforce training is a persistent challenge in Latin America, with a relatively young population and high demand for education. Long-distance and online learning have experienced strong growth, offering flexibility and lower costs than traditional education modalities. In Brazil, according to a recent study by the Brazilian Association of Private Universities (ABMES), by 2023, private institutions will have more students in distance learning than in the classroom.
- The healthcare sector also offers opportunities for foreign companies. Latin America has seen a sharp increase in life expectancy over the last decades, leading to growth in the elderly population. At the same time, chronic diseases such as obesity, diabetes and cancer are on the rise due to an increasingly urban demographic. In order to expand the reach of health services in times of fiscal austerity, Latin American countries will have to invest in productivity and efficiency, using mobile technologies and artificial intelligence in public and private hospitals.
Entering this promising yet complex market requires a first-rate communication strategy. Present in the most important economies of Latin America, Sherlock Communications has specialised in the development of PR and digital marketing campaigns for foreign companies throughout the region.
