This is what 2014 will look like

ILLUSTRATION: © ISTOCKPHOTO.COM/ leszekglasner

2014 looks good for Latin America. The region will grow by 3.5 percent, a touch better than last year. This year’s seven presidential elections won’t affect this outlook and the region’s political scenario shows no signs of major changes or extreme radical movements.

There might be some protests from the new middle class, who will feel that the promises of prosperity are not happening as fast as the politicians predicted, but capital investment won’t be leaving the region because the returns will still be higher than those of the first world.

It will be a good year for the multilatinas in spite of the pressures to revalue. In the last five years, the largest of these companies grew at twice the rate of their countries of origin, and as we show in this edition, they will increase their sales this year by more than they did in 2013.

Some good things will happen. For example, the digital market will grow at an accelerating rate. The internet population of the region is growing faster than anywhere else in the world – by 21 percent per year according to numbers provided by IMS Research, compared with one percent in the United States. Sales in electronics are growing by 41 percent in the region and just 13 percent in the United States. Sales volumes are still small, but there are some remarkable exceptions. Grupo Pão de Açúcar, for example, is increasing its sales at one of its online sites by more than 60 percent per month.

Still, not everything is rosy. If the countries are going to maintain this rate of growth, their internal markets and their middle classes need to be strengthened. For this to happen, efforts must be made to reduce poverty permanently through the creation of jobs and opportunities for access to productive assets. That’s why the situation in Venezuela, which has the world’s highest inflation rate, is so worrisome. Inflation is a tax that’s not levied by any congress, and it’s terribly regressive. In 2014, Venezuela will again occupy first place regardless of any band-aid measures taken by President Nicolas Maduro. If he doesn’t make some far-reaching policy changes, this will be a dreadfully hard year for the poorest people in the country – those who, he will say, are the great beneficiaries of 21st century socialism.

As for security, it is in danger of deteriorating further in Guatemala, Honduras, Haiti and Venezuela. Those countries will have to redouble their efforts to make the streets safer for more people.

An accurate projection has to include one more element. The number of natural disasters in Latin America has increased by a factor of five in the last 40 years. The data from the Economic Commission for Latin America show that they have exploded from a range of about 15 disasters per year in the seventies to 90 in 2010. It’s a trend not expected to turn around in the next few years. There will be disasters this year. We don’t know where, or how big they will be, but there will be a sizable number of them. This imposes a new task: the protection of those who live there from the unavoidable fact that today we live in a world more exposed to extreme climatic conditions.

That’s how we see 2014. It’s a horizon generally positive, but there are some areas that need more work so that they aren’t a burden that leave the region straggling along behind.

 

Santiago Gutiérrez,

Executive Editor

sgutierrez@latintrade.com

 

Filed Under: Letters from the EditorOpinion

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