Latin America is for many investors and multinationals the place to be in the following ten years.
Why? First of all, these countries achieved strong growth and were able to reduce the poverty among the people. On top of that, Lula da Silva turned his country, Brazil, in the last eight years into a real economic super power. In addition, western companies see Latin America as an alternative for China. Most of the Latin American countries are democratic and there isn’t a language barrier. Finally, this Latin American soil is plenty of natural resources.
That is why big companies don’t want to miss this trend and are investing a lot in this continent. Volkswagen and Fiat have built vast factories there and also AB Inbev, Arcelor Mittal, etc. are represented in the region.
These companies and conglomerates are all expecting extremely fast growth. But what if you invest in a country that isn’t that democratic such as: Venezuela, Bolivia or Ecuador? Or what if next elections change the political balance completely? What if Mexican drug wars start to affect the whole continent? What if education and the national infrastructure aren’t that developed to maintain, support or secure this strong economic growth? Isn’t the Latin American economic growth threatening our ecological balance by chopping down a vast number of trees in the Amazon Rainforest?
Jonas Van der Slycken
http://www.tijd.be/nieuws/politiek_-_economie_economie/De_superboy_van_het_volgende_decennium.8984251-3153.art?utm_source=picks&utm_medium=direct
Investing in these companies could be a good bet because they’re likely to grow but there is also a lot of uncertainty. Climate change is indeed becoming a big topic in western societies and people will possibly blame these companies for being one of the culprits (rather than themselves).
BeantwoordenVerwijderenThe political situation is another issue. These regimes often made a lot of sacrifices to make sure companies will invest in their country. Will countries like Brazil be able to deal with the macro-economic consequences and what if the political situation changes?
And although these nations seem to become economic super powers, we have to ask ourselves who really benefits: the big companies or the country and its inhabitants?
These are questions that make investing in these ‘safe’ firms wishful betting.
Sander Van Ouytsel