Latin American Outlooks and What They Mean for the U.S. and Florida
The region’s economy is projected to grow only 0.1 percent this year according to economist projections. The combined forces of worsening terms of trade, a stronger dollar, a slower Chinese economy as well as economic crises in Argentina, Brazil and Venezuela are all hampering growth.
What do these changes mean for the U.S. and Florida?
- Reduced Exports:
Weaker demand and a stronger dollar impacting Latin American markets may result in reduced U.S. and Florida exports.
- Decreased Tourism:
Stalling economies have caused tourism and business travel to the U.S. to take a hit. Florida’s tourism industry, a crucial part of the state’s economy, may suffer.
However, there are several positive opportunities for both the U.S. and Florida within several nations:
Chile’s industrial sector remains stable for the remainder of the year. While copper demand has taken a hit, renewable energy and construction sectors are likely to be the two major growth sectors in 2015. A stable political environment, rising domestic demand for energy, and a significant pipeline of infrastructure projects are expected to drive growth in the short run.
Colombia’s industrial sector remains stable and diversified. Continued domestic demand from an increasing middle-class population and steady investment are expected to create GDP growth for the rest of the year. Reduced oil prices will have a minimal impact on growth.
Mexico seems to be a bright spot for the Americas. A steady improvement of the U.S. economy and a depreciated PESO is expected to increase Mexican exports as well as foreign investment inflows in 2015. Reformed laws which have opened up its energy sector are also expected to attract significant investment.
Even more opportunities arise from the area as a whole. Latin America, with a population of approximately 600 million people, is home to nearly 15,000 “ultra high net worth” individuals, or people with fortunes of at least $30 million, according to the luxury industry consultancy Wealth-X.
The number rose 5 percent last year, while the number of billionaires in Latin America rose to 151, a 38 percent increase resulting in the fastest growth rate for billionaires of any region on earth.
The region’s largest economies, Mexico and Brazil, remain the largest generators of growth and wealth. Mexico is the world’s second-largest market for private jets, behind the US, with Brazil poised to surpass it within the next decade, according to a recent market study by the Brazilian jetmaker Embraer. According to the market research firm Euromonitor, the Latin American luxury market will total $26.5 billion in 2019, up 88.8 percent from 2014 boasting the strongest growth in the world.
BRICS Meet In Brazil, Create Bloc Development Bank
Leaders of the BRICS group of emerging powers – Brazil, Russia, India, China and South Africa – have decided to create their own development bank as a counterweight to what they perceive are “western-dominated” financial organizations like the US-based World Bank and International Monetary Fund.
The move came during the BRICS Summit earlier this week in Fortaleza, Brazil. The summit comes as the five countries, whose economies together represent 18 percent of the world total, are experiencing sharp slowdowns in their once fast-paced rates of growth.
The new development bank will reportedly be based in Shanghai and is expected to be functional within two years. It will be capitalized at $50 billion, a figure that could grow to $100 billion to fund infrastructure projects. The fund would also have $100 billion at its disposal to weather economic hard times.
The new development bank’s first director will reportedly be from India.
“We remain disappointed and seriously concerned with the current non-implementation of the 2010 International Monetary Fund (IMF) reforms, which negatively impacts on the IMF’s legitimacy, credibility and effectiveness,” the group said in a joint press release.
The BRICs leaders are now in the Brazilian capital of Brasilia, meeting with their counterparts from Argentina, Chile, Colombia, Ecuador, Venezuela and several other Latin American nations to discuss future economic and trade cooperation.
BRIC giant China is particularly interested in Latin America. After this week’s discussions, Chinese President Xi Jinping will stay in Brazil to launch a China-Latin America forum with the leaders of several regional countries including Cuba, Argentina, Ecuador, and Venezuela.
China is growing in influence in the region. Last year, the country, two-way trade with the region amounted to more than $261 billion.