The light at the end of the tunnel

Seen from the outside and from a distance, recent times have appeared a bit complicated for the region.

Photo: El Pais, Uruguay
Photo: El Pais, Uruguay

Own issues and, above all, external issues had put pressure on the analysis of investment alternatives in Latin America and, especially, in South America.

The bad reputation coming from a not so distant past certainly contributes to make it easy to exaggerate the realities, to imagine worse times upon any normal swing of the cycles of every society, to take for true what is not and even to imagine that such fictitious reality may be even worse.

So to row against the current despite those who say it is not possible, being already sure that it is possible.

What would be of these nations if it were not for their strength to struggle against difficulties, for their respect for the legacy of his predecessors, for their tenacity, their ability to excel and above all, for being young nations that have been improving their methods and practices, especially during the last decade.

It is true that everything is not the same everywhere and that each country in the region has its own peculiarities, but let’s see…

The fall in price of commodities, the strengthening of the economy of the United States and the consequent strengthening of the dollar are variables that affect almost everyone in the same way.

In some cases oil impacts in the country`s economy, in others, minerals, soy or copper or some combination of these and, as if it were not enough, devaluation of local currencies, which is sometimes very substantial.

Surely, one cannot make the countries responsible for these issues. Cycles are cycles and occur everywhere and not just in Latin America. In any case, the issue is what has been done in good times to be prepared to moderate situations like these.

Not all countries have acted in the same way in this respect. For whatever reason and arguments that can be raised, the truth is that some have found that their increased fiscal deficits began to drill genuine resources and, in some cases, without sufficient reserves to alleviate the situation.

In addition, a number of particular situations have hit some countries quite significantly while in others the impact was lighter.

Brazilian crisis, which resulted in the recent removal of former president Dilma Roussef, keeps the country`s economy submerged in a long recession that still shows no clear signs of recovery. We still have to see how President Temer can carry out a recovery program that can overcome the situation to start putting the economy back on the growth path.

Argentina is on a way that is well observed by the forces of capital but must still overcome some rough areas until positive signs begin to show, beyond the assurance that the way has already begun to be walked on.

Peru has suffered, as it is often the case, the typical paralysis caused by all election processes, awaiting confirmation of the course that would be expected with the new president. The arrival of Kuczynsky has brought a contagious optimism. My recent visit to Lima confirms to me that Peru is on the doors of a new growth path. It is worth remembering that this economy has been the one that has grown more steadily in recent years and even at higher levels than any other country in the region, including Brazil in its best times.

Colombia has taken a substantial step with the issue of guerrilla having finally reached an historic peace agreement. Surely this will help the country to focus on the growth path, which begins to be viewed as a reality in the short to medium term.

Ecuador, focused on providing a major boost to tourism business, is seen as an opportunity to be considered by all those who are part of this industry.

Paraguay and Bolivia continue to offer the opportunity with growing-demand markets that may not be sufficiently supplied by the installed offer and where the pipeline is still delayed to accompany the mentioned growth.

Uruguay and Chile, showing opportunities but careful about destinations and segments in which to invest, some need time to accommodate the new offer added recently.

A single line to Venezuela, where the future appears now completely uncertain.

The economic cycles

As I stated above, it is impossible to escape the vagaries of economic cycles, beyond the styles or colors of the policies that are implemented.

However, Latin America is not exposed, at least for now, to the threats that are hitting and threatening to continue beating the major world powers on both sides the Atlantic.

In general, Latin America remains a region full of opportunities, where the biggest problems are concentrated on consolidating the path of growth in young countries that are on the way to provide much of its population with reasonable life standards. The way is still under development.

What is coming

That said, let me conclude that a new era seems to illuminate the region in general with some exceptions.

More pragmatic administrations, incorporating in their lines talent that time ago was unthinkable to find available for public administration, start giving encouraging signals to international capital.

New leaders, even with previous experience in the public arena, calling renowned specialists in their subjects begin to show a direction not only in the realities of their countries, but they also begin to pass their mood on beyond their regions.

Optimism begins to spread with favorable prognosis for the whole region and the light at the end of the tunnel is becoming visible.

See you in Guayaquil next September 25-27 :  SAHIC 2016

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