Latin America is luring a wave of Canadian investors and entrepreneurs, from the mining sector to financial services, energy and infrastructure.
They're not alone -- the world is waking up to the region's promise. With overheated currencies, rising inflation and persistent income inequality, it is not without challenges. So what's in store for the continent this year? A panel of experts at a Canadian Council for the Americas event in Toronto explored that very question this week.
Here are some of the opinions expressed, by Nick Chamie, global head of emerging markets research at RBC Capital Markets, Jonathan Hausman, vice-president of alternative investments and emerging markets at Ontario Teachers' Pension Plan and John Price, Miami-based managing director of business intelligence for Kroll Latin America.
-- Every economy in Latin America is expected to grow this year, except one: Venezuela. This kind of forecast -- for near uniform growth throughout the region -- hasn't happened in decades.
-- But be forewarned -- with growth and galloping currencies, many of these countries have gotten pricier. It is now be more expensive to hire a top manager in Brazil than in Toronto, and finding talent is tough.
-- Mexico is becoming an alluring place to do business because there's less red tape and the hot money hasn't flowed there. If anything, it's undervalued. Consequently, it's less expensive with less global competition. Its manufacturing sector should spur growth as the U.S. economy ramps up again. Security problems and the escalating drug war are not going to ease any time soon though.
-- Canadians don't tend to be all that astute about when to buy in Latin America. Typically, they tend to buy when prices are high, overpaying for assets. There's a risk of that happening in this cycle.
-- High prices and competition are making forays into Latin America trickier. But one area still full of potential is infrastructure, where billions of dollars are going to be spent in the coming years. Other sectors, such as retail and logistics, will grow as the middle class expands.
-- Most governments won't veer to the left or right side of the spectrum, but continue in the middle with pragmatic, business-friendly policies.
-- Money flows into Latin America and other emerging markets aren't going to slow, because institutional investors remain underinvested in them. As they start to allocate more funds to these markets, "a wall of money out there is going to be landing on a country like Mexico."