The State Department said Wednesday the U.S. may have to take a larger role in trying to ease the crisis in Venezuela if a South American effort to broker talks between the government in Caracas and the opposition remains stalled. U.S. Secretary of State John Kerry was headed to Mexico to discuss potential next steps with officials there.
In Latin America, this looks to be the year of Brazil — thanks to the impending World Cup and presidential elections. But with another lackluster year looming in emerging markets, fans of transformation, growth and investment potential should instead look to Mexico.
Brazil’s president, Dilma Rousseff, is expected to win a second term this year, and its soccer team stands a good shot at victory. But growth has slowed considerably. In the world’s seventh largest economy, reforms are stagnating and the country faces a possible ratings downgrade.
Mexico, by contrast, is in the throes of serious reforms. It will likely lead Latin America with at least 4 percent growth this year and an improving investment outlook. Standard & Poor’s recently boosted Mexico’s credit ratings because of energy reforms that the rating company trumpeted last month as a “watershed moment” for the country. It is becoming a story of inverted fortunes, as Michael Shifter and Cameron Combs of the Inter-American Dialogue recently wrote.
Even though Latin America has been a laggard among developing markets this year, some advisers are convinced the resource-rich region is poised for a turnaround.
But instead of investing once again in Brazil–the 800-pound gorilla in the group–contrarian portfolio managers are finding smaller markets in Mexico and Chile as better bets to tap into Latin America’s long-term growth.
It sounds like the typical American dream for an immigrant: Each month, Marco Antonio Serna sends $500 to his parents, wife and 17-year-old daughter back in Colombia. Except Mr. Serna, 43 years old, didn’t migrate to the U.S. for work; he went to Chile, where he is employed at a small casino outside Santiago. “There’s a big community of Colombians here,” the former factory worker says.
In a noticeable and important shift in global migratory patterns, millions of migrant workers are no longer relying on the U.S. as heavily as they did for better-paying jobs that allowed them to send money home to families in Latin America, the Caribbean and Asia. Instead, they have moved more to developing economies, creating a shift in money transfers out of countries like Chile, Brazil and Malaysia.
Al Jazeera America, 11/16/2013
Remittances to Spanish-speaking Latin American countries have rebounded from their recent decline, a new study by the Pew Research Center shows, but the amount of money sent to Mexico has continued to fall, likely because the Mexican immigrant population in the U.S. has dropped dramatically since the 2007 recession.
The amount of money or other assets that migrant workers sent to Mexico, an estimated $22 billion in 2013, has fallen from a pre-recession peak of more than $30 billion.
Here’s a dollar – if you change your behavior. That’s the revolutionary – and controversial – idea behind conditional cash transfer programs for the poor, which cover 129 million people across 18 Latin American countries, nearly a quarter of the entire region’s population.
The largest such program is Brazil’s Bolsa Família, which gives a small monthly stipend to 13.8 million families. Mothers must receive pre- and postnatal care, and children must receive basic vaccinations and stay in school until age 17. The Ministry of Social Development monitors feedback from doctors and schools, and the stipend is then deposited into the recipient’s bank account (preferably that of a woman).
Dr. Emmett Brown takes banana peels, leftover beer, and some other pieces of garbage from the trash to charge his car — a DeLorean equipped with the Mr. Fusion Home Energy Reactor. Although in this scene from the movie Back To The Future (1985), the technology was invented in 2015, energy generated from garbage can now be seen in real life, and right here in Latin America.
The system, called biodigestion or anaerobic digestion, generates electricity from gases produced by different organic materials. While Chile and Argentina have just discovered this type of energy source, Peru and Mexico have been using it for the past for 30 years. In fact, the Monterrey subway in northern Mexico operates with electricity from garbage.
As the partial shutdown of the United States government limps into a second week, its effects are being felt not just at home but across the globe. In Latin America, currencies have swung up and down with economists and analysts keeping close watch on the action in Congress for its immediate and long-term impact on the region.
The two largest economies in Latin America, Brazil and Mexico, saw their economies rise and fall respectively in the wake of the U.S. government shutdown and, next up, possibly defaulting due the debt limit impasse. The Mexican peso plummeted to a monthly low because of concerns over demand in the U.S. for Mexican products, while Brazil’s real currency shot up because of speculation that the shutdown would delay the U.S. Federal Reserve’s stimulus program that injected cheap U.S. cash into emerging markets throughout the world.
Latin America’s stock markets have provided a nail-biting roller-coaster for investors. Prices roared higher before the global financial crisis in 2007, and then collapsed. They have failed to regain those highs, despite values almost doubling in 2009. This year has been particularly poor. While Western markets have been in buoyant mood in 2013, Latin America shares have fallen by nearly 20pc.
But Tom Smith, who has managed the Neptune Latin America fund for two years, believes that some parts of the region will deliver decent returns. His biggest bet is on Mexico, which sends 80pc of exports to the recovering US economy.
Miami Herald, 9/18/2013
In simultaneous moves that went almost unnoticed in the rest of the world, Mexico and Brazil passed historic education reforms last week that, if carried out as planned, could help propel Latin America’s biggest countries to the First World in coming decades.
The key question is whether the Mexican and Brazilian people will keep up the pressure on their governments to improve the quality of their educational systems, because politicians will only enforce rules that are opposed by teachers unions if they feel social pressure to do so. Mexico and Brazil’s new education laws are historic, but the battle to achieve world-class education systems is just beginning.