Ten Latin American countries—Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Panama, and Peru—account for half of the U.S.’ free trade agreement partners. These countries have a rapidly growing base of middle-class consumers and diversifying industries. They offer a unique combination of similar language and business cultures. These countries also have made clear commitments to opening their markets and integrating their supply chains with the U.S. Within the region, Brazil is unique in a number of ways. It is the largest country in the region, bordering every country in South America except Chile and Ecuador. Brazil is the only Portuguese-speaking country in the region. It is the second-largest economy in the Western Hemisphere, after the United States, and accounts for more than 50% of Latin America’s GDP. Brazil’s economy is also more protected than its neighbors’.
Brazil has a highly diversified economy and ranks as the ninth-largest in the world. The country has Latin America’s largest aerospace, automotive, oil and gas, mining, capital goods, medical equipment, and chemical industries. In addition, Brazil is the world’s second-largest exporter of food, registering an increase in agricultural production in a model of sustainability. Brazil is the third-largest market for beauty and health care products as well as personal computers. The Brazilian middle class accounts for more than half of the country’s total population of approximately 212 million, making Brazil one of the largest consumer markets in the world. Brazil is also among the world’s top generators of renewable and electrical energy. Those factors, together with Brazil’s abundance of natural resources, demonstrate huge potential for growth that results in opportunities for U.S. companies. These are some of the reasons why 400 of the world’s 500 largest companies operate in Brazil.
With continental dimensions and a population of 212 million, Brazil is among the top 10 largest economies in the world. The country has an estimated $21.8 trillion worth of natural resources, which includes vast amounts of gold, uranium, iron, and timber. Economic growth from the mid-1990s until the 2008-09 global financial crisis helped an estimated 40 million Brazilians move out of poverty and into the middle class. GDP per capita reached $8,717 in the same year. The pre-pandemic estimate was that Brazil was going to grow again this year by around 3%; however, this estimate has changed considerably for Brazil as it has worldwide. The country’s GDP shrank by 4.1% for 2020 and the Brazilian Central Bank predicts 4% growth for 2021. The country is moving forward with structural reforms, including tax and administrative reforms, and is attracting investment in infrastructure by modernizing regulatory frameworks. The government’s agenda includes negotiations on the trade agreements between Mercosur and the European Union as well as the U.S.
Brazil is an industrial and agricultural giant that has natural resources in abundance, a developed industrial base, high standards in scientific research, and substantial human capital. The country is constantly investing in productivity enhancements and modernization and offers excellent business opportunities for Wisconsin exporters in almost every industry sector. Of particular interest is the infrastructure segment, industrial and electrical machinery, agricultural equipment, medical and scientific instruments, vehicles, and construction equipment. Opportunities also exist for Wisconsin companies providing products and equipment for telecommunications networks, power generation, pipelines for natural gas distribution, paving, and consruction of more than 17,000 km of highways and more than 600 km of railroads, improvement of port infrastructures to achieve efficiency and competitiveness.
As one of South America’s most stable and secure nations, Chile is a strong economy that has emerged as a global leader in trade and investment. U.S. companies appreciate Chile’s open market policies, zero tariffs, stable democratic government, solid business practices and low corruption. Although Chile has a population of only 18 million, its open trade and investment policies have attracted the notice of many foreign firms, and it is an important trade and investment market for U.S. and Wisconsin companies. At the same time, the small market size has led some companies to overlook Chile, presenting interesting niche markets and solid opportunities for Wisconsin companies to seize.
For many years, Chile has been one of Latin America’s most stable economies. The country leads most Latin American business rankings and possesses one of the best credit rankings in South America. With a relatively small population, it has attracted a number of well-known multinational and foreign investors with its open and competitive economy.
Chile’s exports are focused on raw mineral and agricultural products. Being a country that does not possess a developed manufacturing sector it is highly dependent on imports of equipment and supplies needed in the country’s agricultural, mining, food processing, and power sectors. The country is also moving more towards digitalization and sectors of interest also includes medical technology, fintech and more. This is due to the Covid-19 pandemic providing a push towards more of such services.
The Republic of Colombia is an upper-middle-income country, the fourth-largest economy in Latin America (after Brazil, Mexico, and Argentina) and has the third-largest population on the continent, with approximately 51 million inhabitants. The dominant sectors of the economy are agriculture, mining, and tourism. Being heavily impacted by the Covid-19 pandemic Colombia saw -7% GDP growth in 2020 but has improved this situation and 2021 witnessed growth of 10%. The pandemic highlighted insufficiencies in sectors besides healthcare leading to a nationwide program to increase infrastructure and education spending. In addition, stabilization in machinery and equipment investment, alongside dynamism in construction investment continue to drive GDP growth. For 2022 and 2023 growth is forecasted to be 3.8% and 3.3% respectively. GDP per capita is also forecasted to continue increasing following the pandemic. Colombia is the most industrially diverse country of the Andean Community, with four major industrial centers: Bogota, Medellin, Cali, and Barranquilla.
Colombia has 17 trade agreements with different countries and organizations. Its main export and import partners are China, the U.S., Brazil, the EU, India, and Mexico. It has free trade agreements or potential free trade agreements with all of these countries, including a free trade agreement in place since 2012 with the U.S. Additionally, being a member of MERCOSUR allows Colombia to see many economic benefits in the surrounding region.
Aside from being one of the world’s most open and investor-friendly economies, Peru has been one of the best-performing economies in Latin America, with a GDP per capita of $6,190 USD. The country is an important trade and investment market for U.S. and Wisconsin companies. Peru ranks 29th among U.S. trading partners and has dynamic mining and agricultural sectors, as well as a very favorable business environment with an attractive legislative and fiscal framework for foreign investors. Peru’s geographic advantage (situated at the heart of Latin America, connecting Colombia, Ecuador, Brazil, Bolivia, and Chile), combined with the government’s strong free trade policy has made the country an important business hub.
A true economic miracle and one of the world’s most open and investor-friendly economies, for two decades Peru has led Latin America with an average annual growth rate of 6.0% per year between 2005 and 2017, slowing down to 2.2% in 2019.
Some of the best prospects for Wisconsin exports to Peru include construction equipment, mining equipment, educational supplies, safety and security equipment, food processing and packaging equipment, water resources, medical equipment, biofuels, and dairy. Due to the pandemic, certain opportunities have opened up, such as the adoption of technology to facilitate both the medical and business areas, including the adoption of medical technology, SaaS, payment methods and more.
WANT TO LEARN MORE?
Reach out to WEDC’s Global Trade and Investment team to learn more about global market intelligence, exporting and more.
The views or opinions expressed here are solely those of the author(s) and do not reflect those of WEDC. WEDC is not responsible for the contents nor does WEDC guarantee the accuracy, completeness, timeliness or reliability of this information.