Trade between Latin America and the world’s third-largest economy continued to grow in 2013, driven by stronger growth in Japan.
The latest data from Latin Business Chronicle on trade between Japan and Latin America shows a relationship that has continued to grow and flourish. The East Asian giant remains among the top 10 trading partners of many of the region’s countries, and has economic partnership agreements (EPAs) with Chile, Mexico, and Peru, and is in the process of negotiating one with Colombia. Given these EPAs, it is no surprise that Japan was the first Asian country to become an observer of the Pacific Alliance, a regional trade bloc encompassing Chile, Colombia, Mexico, and Peru.
After years of stagnation, the Japanese economy is starting to show signs of life again under the new economic policies introduced by Prime Minister Shinzo Abe since taking office in December 2012. Among these economic policies, colloquially known as Abenomics, was a 22 percent devaluation of the yen in 2013, which helped to drive up Japanese exports, and increase demand at home through increased profits. While these policies did lead to increased growth in trade between Latin America and Japan, the 22 percent devaluation makes it appear as if the relationship saw declines in our index.
Latin Business Chronicle spoke with Japanese Deputy Consul General in Miami Masahiro Ogino and consular advisor Ayumu Shimada about the trends in trade and investment between Japan and Latin America. Deputy Consul Ogino says that in the past 10 years, Japan's trade with Latin America has doubled. Japan remains the largest source of Asian foreign direct investment in the region – outpacing both China and South Korea - and the fourth-largest investor in the region overall. Further, since 2008 the number of Japanese companies with offices in the region has grown by 200.
Nowhere is Japanese interest in the region more pronounced than in the automobile sector in Mexico. In the past few years, Mexico has transformed itself into the “new Detroit,” with a number of foreign automotive company locating assembly plants in the country, helping to turn Mexico into the world’s eighth-largest automobile producer – despite lacking a national brand. Within the past year, a number of Japanese automakers announced plans to expand capacity in the country, including Nissan, Honda, and Mazda – coincidentally helping Mexico to surpass Japan as the number 2 auto-exporter to the United States this year.