In an article from Gringos.com, they explore growth in Latin America and the future here.
While there is no doubt that the ongoing demise of Europe, North America and to a lesser extent the Far East, all caught up in the ongoing worldwide economic downturn, has assisted growth in Latin America, there is more to this than meets the eye. It is becoming more obvious that economic growth in Latin America was already on the cards before the demise of the general worldwide economy and there are a number of reasons why this ongoing growth will continue for the foreseeable future.
We will now take a look at some of the main elements feeding ongoing economic prosperity across Latin America and indeed what these mean for the region in the longer term.
US baby boomers
There are literally tens of millions of US baby boomers born in the 1960s who now have money in the bank and significant assets on their balance sheets. Many of these are now looking towards retirement, or indeed career changes, and the ongoing economic growth of Latin America is certainly catching their eyes. Over the next decade or so experts believe that a large number of US baby boomers will look to experience Latin America and potentially stay for the long-term.
When you bear in mind the relatively low cost of living, compared to the US, many baby boomers will get more bang for their buck in the future in Latin America.
Latin American middle class
We recently covered the situation in Mexico where the middle classes are growing in number and seem to have more and more finance available to them. This has led to significant demand for both retail and domestic property which is helping to feed the ongoing boom in this particular area. For many years now we have seen an improving education of the masses in Latin America, an economy which was for many years on the edge of a major breakthrough and finally the region is starting to reap the crop which was sowed many years ago.
Perhaps we should look back at the near collapse of Brazil in the late 1990s as a turning point for the region. Not only did Brazil manage to turn itself around very quickly but it also paid off a large International Monetary Fund debt before the due date. In all honesty the ongoing demise of the worldwide economy has assisted in a growth in wealth across Latin America but not necessarily created it.
Worldwide trade
We are starting to see more and more trade organisations emerging from Latin America with BRICS amongst the best known. In years gone by the likes of Latin America where on the whole looked down upon by Europe and North America as inferior trading partners but this is most certainly not the situation at the moment. Latin America will become more central to the worldwide business arena, more attractive for international investors and ongoing trade discussions will only strengthen this position.
The Latin America which we see before us today is very different to that of 20 years ago or even 10 years ago and the situation is continuing to change.
Conclusion
Historically the main problem with Latin America was inflation which was very often left to run out of control and literally ruin national and regional economies. While the situation is very different today, perhaps assisted by changing political beliefs, there is still a need to appreciate and be aware of potential problems in the future.
Inflation has been and continues to be a problem, both negative and positive, across Europe and North America and indeed it will always remain a threat to Latin America. Perhaps the greatest risk to long-term economic growth across Latin America is the potential for governments to take their eye off the ball and assume that everything will continue to be rosy in the garden.