Asia is likely to surface as the new destination for Latin American exports in the medium-term
While the Latin American economy faltered significantly in 2014, a very gradual recovery is expected in 2015. This revival will be triggered by an increase in government spending on structural reforms. Growth may pick up further in the latter half of 2015 with the expected stabilization of oil and commodity prices. Although a rebound in the United States (US) is likely to boost Mexican exports, regional trade will remain restrained in 2015.
New analysis from Frost & Sullivan, Global Economic Outlook 2015— Emerging Latin America (http://www.frost.com/q294156482), finds that domestic demand and investor confidence in Latin America continues to be subdued. Weak commodity prices and low export demand for mining products will impede the region's speedy recovery.
"Lack of investment and high inflation are major concerns in the Latin American region," said Emerging Market Innovation Industry Manager Rituparna Majumder. "Although some countries, including Mexico and Central America, will record healthy progress owing to the economic rebound in the US and strong domestic demand, commodity exporting countries such as Brazil, Chile, Argentina and Venezuela will experience a tough 2015."
Chile
Low demand for commodities, especially copper, from China and Europe will slow down economic growth by one percent in 2015. Nevertheless, the construction and alternative energy sectors are forecast to register sturdy growth bolstered by sustained infrastructure developments and pipelined renewable energy projects.
Colombia
The Colombian GDP is expected to bounce back in 2015, although the fall in energy prices may lower the current account surplus of the economy. Nonetheless, supportive government policies and steady domestic demand will support moderate industrial development in 2015.
Mexico
Mexico is poised to witness modest growth in 2015 due to an increase in exports to the US, improvements in consumption, and hikes in public sector spending. Oil and gas production, however, is anticipated to decline due to lack of investment and faltering oil prices.
"Since more than half of Latin American exports are directed towards China and Europe, the outlook for the region appears bearish unless there is a significant recovery in these economies," concluded Frost & Sullivan Emerging Market Innovation Research Analyst Susmita Das. "Even so, Asia is likely to emerge as the new destination for Latin American exports in the medium-term."
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