By Maplecroft’s Latin America Practice
Latin America remains an attractive destination for investment despite associated risks and challenges. In particular, the region boasts growing and increasingly sophisticated financial markets, high resource potential across a range of commodities including shale hydrocarbons, mining, and various crops, expanding consumer markets, and growing participation in globalised manufacturing supply chains.
Latin America’s appeal is reflected in foreign direct investment (FDI) flows, which registered a total of US$154bn in 2011, 28% higher than in 2010, demonstrating the strength of the region’s recovery following the global financial crisis. FDI flows further remained high in the first half of 2012, with South America (mainly Chile, Peru, Colombia and Argentina) and the Caribbean compensating for a decline in Central America.
These figures show that investor appetite for investment in Latin America remains strong and the potential returns are high. Nevertheless, the outlook for growth in early 2013 looks less certain than previously, with Brazil in particular suffering a prolonged slowdown, and traditional risks look likely to be matched by new threats in Latin America’s largest economies. (more…)