Let’s read what the World Bank has to tell us about Latin America in 2017:
“Latin America and the Caribbean is expected to face another year of weak economic performance [in 2016] due to domestic challenges among the region’s largest economies, depressed commodity prices, and tighter regional monetary conditions. Output is expected to shrink another 1.3 percent this year, after declining 0.7 percent in 2015, marking a second consecutive year of recession for the first time in more than 30 years […] The region as a whole is projected to return to growth in 2017-18, as domestic constraints gradually loosen and net exports continue picking up.” (Global Economic Prospects)
This means three things, in my opinion:
1- 2016 hasn’t been easy. 2017 is looking brighter. However, business leaders will still be very cautious. If you’re already selling into the region, this is the time to support your local partners and if you are planning on entering new markets in the region, don’t expect the warmest of embraces, businesses are adjusting to this scenario and might be very reluctant to take on new brands or products. However, if they take you on, they probably really mean it.
2- Still, the region as a whole has been growing for 28 out of the last 30 years and is forecast to continue growing in 2017-18. If you look at the stats for the last 10-15 years, growth has been impressive across most countries. So demand for a host of products and services is still there.
3- This is a regional average. There are significant variations across countries, for example, for 2017:
- Brazil is forecast a small contraction, the end of the current recession seems closer.
- Argentina is one to watch. The new government’s macroeconomic policies might be starting to pay off and the country is forecast to finally grow in 2017.
- Peru’s economic performance continues to be impressive, with a 3.5% GDP growth forecast for 2017.
- Venezuela and Ecuador appear in trouble. However, exporters from the EU will benefit from the EU-Ecuador Free Trade Agreement with is likely to be implemented from 2017.
Three further notes:
- These are World Bank statistics. Other organisations’ forecasts will vary.
- GDP growth is definitely not the only statistic you should look at when researching export markets. We look at different stats for our clients but we also inform them of what’s really happening in the continent, beyond those stats.
- “Bad” stats are not necessarily “bad” for businesses. The real value of stats relies on their interpretation, and the real value of supporting your business in Latin America relies on identifying opportunities behind the headlines.
So 2017 looks like a promising year for Latin America, when apparently the doom and gloom of 2016 is finally over and the economies continue to grow. Our hard work of 2016 will hopefully pay off!
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