5 Latin American Markets to Watch

By Qiana Chavaia on 4 December 2015 0 comments

The International Monetary Fund (IMF) projects that for 2015, the U.S. economy will grow a modest 2.5%. And some analysts predict single digit returns for the S&P 500 for 2016.

Emerging economies in Latin America have stronger growth prospects. In general, emerging markets are projected to grow two to three times faster than the U.S. over the next several years. According to the IMF, from 2009 to 2014 the largest emerging economies grew a total of 48%. As Latin America continues to adapt free-market policies, here are five emerging Latin American markets to watch.

1. Peru

The Peruvian economy is one of the fastest growing economies in Latin America. It is the world's third largest copper producer, and receives a significant portion of its revenue from the mining sector and exportation of metals such as gold, lead, iron, and tin. It also gets about 10% of its revenue from petroleum. While many commodities have taken a hit recently, Peru's current GDP growth of 5.1% is attributed to an expected increase in mining production and infrastructure projects.

Projected growth: 5.0% (2016 est.)

GDP Growth (2013 to 2017): 27.4%

Inflation Rate: 3.5%

Government Debt as % of GDP: 15.9% (2014 est.)

2. Chile

Chile's moderate growth of 3.3% is attributable to an increase in demand for its exports, thanks to the weakening of the Chilean Peso. But Chile is also an unusually stable economy by Latin American standards, and deserves to be on this list, given the relatively lower risk investors may face. Planned infrastructure deals and changes in business tax policies — expected to attract outside business investors — are also good news for the Chilean economy.

Projected growth: 3.3% (2016 est.)

GDP Growth (2013 to 2017): 24.2%

Inflation Rate: 4.6%

Government Debt as % of GDP: 16.5% (2014 est.)

3. Colombia

Colombia is Latin America's fastest growing economy, thanks in part to a surge in foreign direct investment, and an improving security situation. It's also less dependent on oil than most oil producing countries — representing only 16% of GDP. Though the Colombian Peso has weakened recently (to approximately 2,900 Pesos per USD), several industries stand to gain from the weaker currency, such as manufacturing, financial services, telecommunications, tourism and transportation.

Projected growth: 3.7% (2016 est.)

GDP growth (2013 to 2017): 21.9%

Inflation rate: 5.25%

Government debt as % of GDP: 41.9% (2014 est.)

4. Mexico

Mexico has the second largest and strongest economy in Latin America. Its main exports are petroleum, automobiles, and a variety of manufactured parts and electronic equipment. Its expected growth is due to strong U.S. demand for its exports (the U.S. imports 70% of all Mexican exports), and planned spending on infrastructure projects like Mexico City's new international airport.

Projected growth: 3.3% (2016 est.)

GDP Growth (2013 to 2017): 17.5%

Inflation Rate: 2.88%

Government Debt as % of GDP: 41% (2014 est.)

5. Brazil

Brazil is the largest economy in Latin America, with a population of just over 200 million people. Though corruption scandals have plagued recent governments, foreign direct investment to the South American nation remains strong, and the country's growth prospects reasonable.

Projected growth: 1.0% (2016 est.)

GDP Growth (2013 to 2017): 22.3%

Inflation Rate: 14.25%

Government Debt as % of GDP: 59.3% (2014 est.)

Have you added any of these markets to your portfolio?

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