Table of Contents
Executive Summary—Economic Growth Trends for 2015
•Economic growth in the Latin American region is expected to recover to approximately x % in 2015 after registering a slow growth of x % in 2014. Subdued growth estimates can mainly be attributed to weakening of commodity prices, which lowered private investment in the region.
•Domestic policy uncertainties, as well as weak investor sentiments toward Latin American economies mainly Brazil, Peru, Argentina, Venezuela, and Chile are likely to impede a healthy growth rebound in 2015.
•A gradual rebound in economic activities in the US economy is likely to boost exports of Latin American countries. However, low domestic demand is likely to dampen regional trade growth in 2015.
•Public investment by domestic governments in the region is likely to increase in 2015. This may help address infrastructural barriers, boost domestic sentiments, as well as attract foreign investment in the region.
Emerging Latin America Highlights, 2015
The slowdown in Western Europe and China is expected to hamper the demand for Latin American (LATAM) mining and energy exports in 2015. Emerging Asia is likely to surface as the new destination for Latin American exports in the medium-term.
Chile is the largest producer of copper in the world; the fall in global copper demand and the resulting surplus in the sector is expected to adversely affect the revenue of the Chilean economy in 2015.
Continued domestic demand and steady investment are forecast to generate healthy growth in Colombian GDP in 2015. Recent fall in oil prices is likely to downtrend growth marginally in 2015.
Mexico appears to be a bright spot in the Latin American region. A gradual pick up in the US economy is expected to boost Mexican export demand as well as foreign investment inflows in 2015. Reformed laws to encourage private participation in the energy sector are likely to gradually attract steady investment into the sector.
Emerging Latin American Growth Sentiment, 2015
•The outlook for Chile’s industrial sector remains stable for 2015. 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 is diversified. Rising demand from the increasing middle-class population is likely to keep industrial growth moderate in the economy in 2015. This is despite a fall in oil prices, even though oil and gas is the largest revenue-generating sector of Colombia.
•Mexico’s industrial activity is likely to gradually pick up as demand for intermediate manufacturing goods from a recovering US rebounds in 2015. A depreciated Peso is expected to support a healthy rebound in exports. Export-oriented basic metals, food and beverages, and automobiles are likely to post healthy growth in 2015.
Emerging Latin America Industry Outlook 2015
•The Latin American industrial sector is likely to remain vulnerable to external conditions in 2015, with rising cost of external financing, slowing demand from China, and constrained capital inflows in the region.
•Changing labor market dynamics due to rising wages and declining benefits of low costs in the region, mainly owing to high consumer prices, is likely to adversely affect investment in the industrial sector in the region in the short-term.
•Despite having abundant natural resources and long-standing mining experience, downside risks such as infrastructure bottlenecks, weak investor sentiments, and restrained domestic demand are likely to persist throughout 2015.
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