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Latin America 2020

LATIN AMERICA 2020-2030

The whole region is beginning a transition period where the socialist trends of the last 15 years are changing toward free market economies. It has been determined that large government participation of the economic activity is not helping to decrease the poverty indexes in the region. The large government ideas have become a condition for increased corruption in those countries, especially where the socialist regimes are more evident: Venezuela, Nicaragua and Bolivia.

Some countries have just recently changed government. A prominent illustration of this is Brazil. They are transitioning from a progressive (socialist) structure of many years to a free market economy driven by the very difficult economic and social conditions existing in Brazil over the last 5 years. Mr. Bolsonaro, the new president, was elected on a platform of attacking corruption and opening the country to a more open economy.

The most prosperous economy in the region is CHILE which also has changed from a progressive socialist government to a more open economy. With a clear free market orientation, growth indexes in Chile are very high. The result is a country whose whole social and economic structure over the years is now structured like other more developed countries.

Argentina, which is a very large economy has been under political and social turmoil for many years. Yearly devaluation of their currency is in the order of 50% and shows no signs of slowing down. They will have elections this year and there is a possibility that a socialist regime will be back in power.

The most prominent problem in the whole region is VENEZUELA, the richest country in Latin America that has a huge problem of high poverty levels, scarcity of basic goods and medicine. The aforementioned has forced about 3 million Venezuelans to migrate to different countries in Europe and Latin America. Presently, there is a turbulent political situation, where there seems to be a real possibility, of a regime change in the near term. The actual situation is not sustainable and there is consensus that Venezuela’s situation could change this year.

There is a group of countries (Colombia, Peru and Ecuador) that have shown sustained economic growth in the last decade with large investments in infrastructure and a large savings base in their economy.

The Central America region is going through a period of turmoil with drug trafficking, affecting the social stability of the region. Elections in Guatemala do not indicate a good perspective for the country and a newly elected president in El Salvador, will have to deal with a very high level of instability. Nicaragua is in a very unstable political situation and it is hard to predict the outcome.

Costa Rica and Panama are the two stable nations in the region where an acceptable economic growth is the norm (3 to 4%) but, they are also dealing with drug money influence impacting their economy.

Mexico, is the largest Latin American country doing business with the United States, is going through a non-conventional process of change with the other Latin American countries. The Government of Mexico started with a new President last year who has socialistic leanings in how to run the country. There is quite a bit of uncertainty on where this country will go in the next couple of years. It is a radical change to their political system, within a very traditional society.

BUSINESS ENVIRONMENT.

It is common knowledge that some of these countries have very large savings base in economies that have very few alternatives of investment. Most of these high savings based countries end up investing their resources in the purchase of debt issued by their governments. Very few are exposed to the large investment banking institutions located in the United States and Europe. Some countries are basically paying for their savings custody in places as far as Singapore.

Technology has become a very active activity which has attracted US and European companies (support, software development, etc) to acquire work in these countries. The preferred countries in the area are Mexico, Costa Rica, Colombia and Chile.

Although the Latin American countries all share a common language and very similar cultures, the business environment changes from country to country and is affected seasonally by elections of presidents and new governments, economic situation of the country and the stability of the system.

CONTACTS IN LATIN AMERICA

I work for SICPA LATAM which is the subsidiary of SICPA (the parent company in Switzerland). I am a consultant for them on a nonexclusive basis since 2014. I work with a network of consultants in each country where we see the potential of getting business. Presently we are operating in Brazil, Argentina, Chile, Peru, Colombia, Costa Rica, El Salvador and Mexico.

The network of consultants operate like me on a nonexclusive basis for SICPA. Among my network, we have retired generals and admirals from South America including a Peruvian Naval Academy Graduate who retired as an Admiral from the Peruvian Navy and latter a Minister of Foreign Trade in Peru.

The restriction that we have is, as we are a security company our policy is that we don’t publish our names and if we make exceptions, they are only for professional offerings and connections. I will supply the contacts per country as an opportunity is identify for a determined country.

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