Key Emerging Markets: Brazil, Mexico, Argentina, Colombia, Venezuela, Peru, Chile
Major Industries: Oil, Mining and Agriculture
Latin America is the region of the Americas where Romance languages are primarily spoken. Latin America comprises of over 20 nations geographically located North, Central and South America and the Caribbean; territories where Spanish Portuguese and French languages prevail. Before the late 15th centuries, indigenous people such as the Aztec, Inca and Maya, many of which had advanced civilizations, populated the region. By the end of the 16th century, the Spanish, Portuguese, Dutch and French colonized large areas of Latin America. However, most countries achieved independence by 1925, and now exist and relatively young post-colonial countries. Latin America accounts for around 8.5% of the global population, and is home to approximately 643 million inhabitants, possessing a lower population density than Asia, Europe, and Africa.
Stability of Region
Despite having gained early independence, the region has been plagued with social and political unrest that greatly hinder its development. Latin America was ranked the third most unstable region in the world in the post-war era. Legislations and enforcement remain poor as the countries struggle with drug trafficking, immense violence, gang activities and widespread availability of firearms. Out of the world's 50 most violent cities, 41 are in Latin America alone – the highest homicide rate being found in Caracas, Venezuela. The systemic political and social unrest has led to an economic outlook that comprises of a weak investment climate and volatile growth, and a lack of concrete policies to develop industries past its reliance on primary sectors and natural resources.
The region has always been highly dependent on commodities as the main engine of growth, making it vulnerable to commodity price shocks and fluctuations. Despite recent efforts to promote the growth of non-commodity exports, which have resulted in a slightly more diversified export structure, Latin America remains – on average – as exposed to commodities-related risk as four decades ago. Economic diversification remains high on the agenda for Latin American governments as there is a need to move on from an overreliance on agriculture and commodities exports.
The Latin America region is forecasted to experience sluggish growth in the future; a continuation of weak growth momentum that it has experienced in recent years. Real GDP per capita in the region has decreased 0.6% between 2014 to 2019; a reflection of a sluggish business and investment climate, along with endemic socio-political issues that have exacerbated economic setbacks. The outbreak of the Covid-19 pandemic will usher in one of the worst contractions in history for the region this year, with the region’s GDP forecasted to decrease by an average of -5.1% in 2020, and regional inflations decreasing 0.6% as of May 2020. As the country seeks to recover in the following years, it will need to bring domestic demand back up to pre-pandemic levels, and to be able to attract foreign direct investment into the country as it ramps up production and diversification in its industries.