Due to several economic factors such as the dovish outlook of the United States Federal Reserve and the weakening US Dollar, analysts believe that Latin America may be a better bet for investors looking to gain in emerging markets. According to Barclays Capital, Latin American economies may be seeing substantial growth rates in the coming years, despite the ongoing turmoil such as the US sanctions against Venezuelan oil imports.
The latest figures from the investment bank have shown that despite the US sanctions, Venezuela's GDP may still experience growth by as much 6 percent next year. Other countries with deeper securities markets are also predicted to experience steady growth. Brazil is apparently forecasted to experience growth next year of 2.6 percent from a 2.2 percent growth this year. Columbia will apparently also experience more of the same amount of growth, with its GDP growth increasing from 3.5 percent to 4 percent. Argentina, which had previously been in recession, is seen gaining a 2.2 percent growth.
Mexico, which has experienced a general slowdown, is seen as having a GDP growth of about 2 percent next year. According to the investment bank's report, the overall GDP growth of Latin America may exceed the growth rates of Asia-Pacific regions in the coming years.
Other investment banks, such as the Bank Leumi in New York also predict more of the same amount of growth in Latin America. According to the first vice president and portfolio strategist of the Bank Leumi, Bozidar Jovanovic, they actually see great opportunity in the Latin American markets, despite their usually meek stance on emerging markets. The main reason for the positive outlook in the region, Jovanovic explained, is that its growth is starting from a relatively low base.
As of this year, most of the Latin American markets have been dipping into the red, with the exception of Brazil. Over the last 12 month, both Brazil and Columbia have exceeded expectations. Investors are of course still cautious of the forecast given the risks involved with the country's pension reforms. As for Mexico, fundamental analysts predict that the conditions now are actually rife for a possible rebound in the first quarter. With improving employment growth and wage increases, consumption in the country may actually boost its economy.
Barclays also sees a possible rebound in Argentina, despite inflation rates reaching over 35 percent a year. The firm's analysts believe that higher interest rates should keep everything in check and the country's harvest levels and increased consumption could take it out of its rut. Central banks in Latin America are still expected to remain on hold this year, with Brazil leading the charge.
