Latin America Economic Snapshot and Projections
In the past 10 years, Latin America has shown tremendous growth supported by the strong economic and political reforms implemented during in the past 2 decades, the region, even during a global meltdown, managed to show significant growth patterns throughout Latin America.
In addition, external in vast wealth of Latin America’s natural resources has pushed the region to the frontiers of development and growth.
The projected consumer market for Latin America is staggering with 665 million people and combined GDP of almost $6.8 trillion in 2020
With the middle class doubling in the next 8 years, Latin American opportunity is being seen in almost every industry sector, in small, medium and large scale business.
The growing purchasing power Latin Americas middle class is allowing them to gain access to goods that were unattainable in the past, like cars, and electronic gadgets. Companies from different industries are already taking the lead by launching affordable alternatives, many industry sectors.
While some major world Economies in the world such USA, Japan and France will be face sever labor market shortages by 2020, Latin America’s will have an incredible strong labor force with the highest working-age and youngest population, and as well they will be highly educated. By 2020, Latin America’s working-age population is expected to reach more than 40% of its population.
Comparatively, a Mercer (http://www.mercer.com/home) report indicated, the U.S. working-age population, defined in the report as ages 15-64, is expected to decrease to 64% by 2020.
Central America Takes Lead in Latin Exports in 2012
Latin American exports to the world grew by 1.5% this year’s figures, according to a study released Monday by the Inter-American Development Bank (IDB).
The numbers are considerably lower than in previous years due to the slowdown of the global economy, says the IDB.
In 2010 and 2011, exports increased by 29% and 26%, respectively.
This year the situation was uneven across countries. While exports from Mercosur and Chile were down 2% and 6%, respectively, Central America increased to 6%.
Franchise Growth Boom and Expected to Continue
Experts project that the Latin American middle class will more than double by the year 2020. A massive new market is emerging in these Latin American economies — and thanks to the increasing availability of credit, Latin American consumers find themselves in a better position to utilize financial positions. It’s a important shift that companies and new investors are fast becoming aware of, and this is reflected in regional investment capital entering the Latin Americas.
Franchise growth for many major brands in food and clothing has soared in Latin America in the past 5 years. The franchise growth is not just in larger countries like Brazil but extends into smaller Latin American countries, too, including Panama, Costa Rica and Uruguay.
Brazil now has more than 1,800 franchise brands. Brazil’s franchise count outplays the number in Mexico which is about 1,300 franchise brands and in Argentina which is approximately 500 brands at, according to reports from the franchising organizations.
Starbucks has been successfully breaking new ground. This year in Costa Rica they opened their first franchise and have opened a second with rumors of several others for 2013, and continued expansion in to other Latin American countries.
The Franchise Hamburger War continues in Central America, with McDonald’s and Burger King having been long established here, Wendy’s has made significant gain in open new and successful franchises across the region.
Consumer credit will continue to grow at 8% to12% per year in Latin America over the next few years – after growing at more than 20% per year since 2003
Latin America remains under-banked and a rising middle and working class are now demanding access to credit. Banks need and will focus on upper and middle income consumers.
Non-bank lenders are already offering credit to upper and middle income consumers, as a lead in their principal business offering, such as telecommunication services or appliances, etc.
Expect to see further expansion of retailing, extending from Wal-Mart style discounting stores all the way up to luxury brand shops. Luxury brands especially have and will continue see significant growth in Latin America as more and more HNWI’s (High Net-worth Individuals) become attracted to Latin America lifestyle and opportunity.
Latin America will continue to see shifts in manufacturing supply chain from China to Latin America as Chinese assembly costs continue to soar because labor market issues, many of the assembly contracts USA and Mexico lost to Chinese competitors over the last 10-15 years will be returning but many will go to Latin America countries.
Sectors in the generic drugs and automotive industries, consumer behavior, as well as medical tourism will continue show expansion as new investment keeps pace with growing demand.
Per capita car and real estate ownership in Latin America has more than doubled over the last ten years and will do so again over the next ten years as drivers in the middle class cause its continued growth.
There are over 100 mobile phones for every 100 Latin Americans, which show highly penetrated market, but only 12% of those mobile phones are smart phones. You can expect this to change over the next five years and see more than 150 million smart phones are sold across Latin America.
Growing skilled labor force, IT infrastructure investments and time zone proximity to the US are key aspects for Latin America to become a main destiny of choice for business process outsourcing services.
Governments in Latin America are expected to invest $3 to 4 trillion in improving the standard of living in slum and shanty town areas by providing improved access to water sanitation, paved roads and other infrastructure, as well as better low-income housing.
Broadband access to revolutionize Latin America – Latin America will be linked through a chain of 1.4 billion connected devices including computers, mobile phones, tablets and other devices by 2016.
Growth in Latin America will continue to create opportunities and is considered to be one of the world’s most dynamic markets of this century.
The Costa Rica News (TCRN)
San Jose Costa Rica