Here’s What Lies Ahead For Latin America This Year

2011 year-end growth figures and new forecasts for 2012 demonstrate continued, but slower, growth, and the emergence of new risks and opportunities in LATAM.

Brazil’s growth will subdued, by recent standards, and Argentina is preparing for a potentially painful economic restructuring.

While larger regional economies slow, robust Chile, Peru, and Colombia increase in relative importance.

  • Argentina: High inflation and a yawning budget deficit are forcing Argentina to lower spending, but trade and capital restrictions remain in place
  • Brazil: Brazil faces a rapidly slowing economy, and government authorities are pushing for monetary easing and higher government spending
  • Chile: The Piñera administration faces political and economic headwinds going into 2012 but Chile’s fundamentals continue to shine
  • Colombia: Growing recognition of the long-term potential of the Colombian economy is quickly eclipsing investor fears of violence and instability
  • Costa Rica: Fragile public finances and a weakening economy have led the government to raise taxes, imperiling future foreign direct investment
  • Dominican Republic: Economic decline in Europe and new immigration laws will have adverse effects on the tourism, agriculture, and mining industries
  • Ecuador: Government spending and stable commodity prices will support growth in 2012, but overexposure to oil continues to present risks
  • Mexico: Mexico enters 2012 with confidence earned from economic resilience and hopes for a smooth political transition in July
  • Panama: Panama’s economy boosted by trade agreement with the US, but political uncertainty clouds the prospects for Martinelli’s reform agenda
  • Paraguay: Contrary to previous expectations, Paraguay will see lackluster growth due to weakening external demand and supply shocks at home
  • Peru: Protests are hurting President Humala’s political standing, but the economy remains strong despite growing political uncertainty
  • Uruguay: Uruguay is at the mercy of economic developments in Argentina and Brazil, with current trends pointing to a slowdown in 2012
  • Venezuela: New socialist legislation makes it harder to turn a profit and easier to run afoul of the law in Venezuela