Introduction
After a couple of years of global economic uncertainty, many investors are looking for opportunities outside of traditional markets.
Latin America has always been a significant player for inter-continental commerce and politics, and is now offering fresh investment opportunities as well.
The region is one of the fastest growing economic hubs in the world – and getting smart about investing there means arming yourself with the best and most up to date knowledge.
Latin America is expected to grow by 3.2% this year, which is significantly higher than global growth expectations for 2019 (2%) and 2020 (3%). The area’s relatively young population, burgeoning middle class and comparative economic stability make it an attractive destination for foreign investors.
Here are four reasons why you should consider investing in Latin America:
- It has a young population with high potential for growth – A recent study by Oxford Economics showed that over 50% of Latin Americans are under 35 years old and can help drive future economic growth.
- By 2020, the middle class in Latin America is projected to double to 100 million people. This means that more than half the population could be middle class by then
- The region’s middle class has grown by at least a factor of 2.5 since 2000 and is expected to continue growing at an accelerated pace over the next decade
- It is a region with one of the highest growth rates of Fintech start ups and is embracing the world of digital currencies
By 2030 middle class in Latin America will be over 340m people
With the Latin American market continuing to grow, multinational corporations are investing substantially in Latin America. This presents a great opportunity for those looking to diversify their investment portfolio.
The opportunity to diversify into Latin America is great, recently driven by the integration of digital currencies in countries such as Brazil.
Here are some facts about the Latin American market:
- The Latin American economy is growing at a faster rate than other parts of the world. For example, according to CIA World Factbook, between 2010 and 2017 Mexico’s GDP increased from $1 trillion USD to over $1.3 trillion USD (a 30% increase).
- There are several countries in South America that have moved away from being dependent on commodity exports and toward developing manufacturing sectors and trade agreements with China and other Asian nations – two areas where there has been strong growth over the past decade or so thanks largely due to economic liberalization policies put forth by governments like Brazil’s Dilma Rousseff administration which was defeated by Jair Bolsonaro after she introduced inflationary currency devaluation policies (making things worse).
Post Covid-19, the global increase in cash flow from tourism is also attracting investors to Latin America.
Many investors are realizing that the global increase in cash flow from tourism is also attracting them to Latin America. The World Travel and Tourism Council estimates that tourism will create 13 million jobs by 2030, making it a great way to diversify your portfolio. Not only does it provide a safe investment option for travelers; it also helps local economies by providing jobs, increasing wages, and contributing tax revenue for government projects. As an investor, you can benefit by investing in companies that provide goods or services to tourists visiting Latin America—for example: hotel chains or restaurants located near popular tourist attractions or beaches like Copacabana Beach (Rio de Janeiro).
Mining, agriculture and natural resources are other areas of interest for investors in the region.
For instance, mining companies including Barrick Gold Corp., Goldcorp Inc., Newmont Mining Corp., Yamana Gold Inc. and Vale SA have all made big investments in Brazil’s massive pre-salt oil deposits. And Canadian fertilizer giant Potash Corporation of Saskatchewan Inc. is leading a group that plans to invest $15 billion over seven years to expand production at mines in the country’s northwest that could supply much of Latin America with potash fertilizer through 2034 when its contract with Brazilian partner Vale SA expires.
Investors should also keep an eye on Argentina’s shale oil potential: Argentina sits atop one of the world’s largest shale formations containing reserves estimated at billions of barrels–that alone could make it one of the world’s top 10 petroleum producers by 2020 if developed properly through drilling techniques like horizontal drilling and fracking (hydraulic fracturing).
Investing in real estate properties can also be a great opportunity for those looking to invest in Latin America
You can also seek out a range of property types as an investment opportunity, even such as distressed properties. These are properties where the owner is in default, such as a foreclosure or bankruptcy. This is often a great opportunity for those looking to invest in Latin America, as well as those looking to diversify their investments and get some exposure to real estate.
Whether you’re interested in energy, agriculture or tourism, there’s a great opportunity for anyone with an interest in investing in Latin America
There are many successful companies based on the continent that can provide solid returns for investors interested in alternative investments. For instance, one of our portfolio companies is a Mexican manufacturer of health care products; another is a Mexican solar panel manufacturer; while still another provides education services throughout Central America.
If you’re looking to expand your investment portfolio, it could well be worth informing yourself further about Latin America.