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WEAKER OUTLOOK DESPITE SOME BRIGHT SPOTS Latin America


Ongoing political and economic uncertainty across much of Latin America is impacting investor appetite generally. This is partly due to risk aversion to emerging markets worldwide and also from the impact of the US monetary policy in the reduction of quantitative easing and rising bond yields.


Economic growth has been showing weakness across the region with Brazil affected by weaker world trade flows and falling commodity prices. GDP estimates for Brazil suggest a Q2 14 contraction of 0.6% quarter on quarter. Moreover, uncertainty around the outcome of ongoing elections and the course of future economic policy, is only likely to weigh negatively on investment decisions until the new president is elected, and possibly beyond. Elsewhere, Chile and Peru are also seeing economic growth losing momentum, while recent policy setbacks, and the threat of default, have contributed to expose further Argentina and Venezuela’s economic vulnerabilities.


67% of investors said they were likely to take on more risk to achieve their returns Ricardo Betancourt, President || Brazil


2015 GLOBAL INVESTMENT SENTIMENT REPORT


Across the region, only Mexico and Colombia seem to be seeing newfound strength. Estimates suggest an economic expansion of 2.4% and 4.8% respectively in 2014, with growth forecast to accelerate to 3.5% in Mexico in 2015. Whether this will be case, it will be partly subject to the successful implementation of a package of structural reforms programme undertaken by the Mexican government over the last two years. This includes the recent liberalisation of the national oil industry. The administration is now focusing on secondary legislation and demonstrating progress on implementation before the mid-term congressional elections in July 2015.


Nonetheless, given the continuing uncertainties surrounding the region, it is little surprise to see that of the total global survey, only 6% of respondents indicated they had an allocation for Latin American investment. This limited interest from outside the region can be traced mainly to Asia Pacific, possibly in response to the new Pacific Alliance initiative (Chile, Colombia, Mexico and Peru) that is actively seeking Asian investment, although interest can also be linked to North American and EMEA-based investors.


COLLIERS INTERNATIONAL


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