Growth in Latin America Opening Doors For Investment Professionals
Emerging markets continue to attract record private capital flows. The Institute of International Finance (IIF) issued a recent report estimating that net private capital flowing into these countries jumped $200 billion last year to $782 billion. The IIF also predicts that these flows will remain strong in 2008. Dr. Josef Ackermann, Chairman of the Institute of International Finance’s Board of Directors, contends that, “Given the slowing pace of growth in the U.S., EU and Japan, emerging markets economies are going to be a particularly important source of support for global economic growth this year.” In particular, the IIF signals continuing overall strength in Latin America.
Executive search firm, A.E. Feldman, reports that emerging markets, particularly Latin America, remain a key focus in the money management business. These regions are attracting investors, and demand for investment professionals with emerging markets expertise remains high. Firms want people who can understand companies in emerging markets on a ground level basis. Language proficiency in Spanish and Portuguese, in particular, are highly sought after skills.
Latin America is “better prepared than ever” to face global economic turmoil, says Josef Ackerman, IIF Chairman and CEO of Deutsche Bank AG. According to Ackerman, “Strong economic fundamentals, booming commodity prices, improved confidence and robust domestic demand improved the region’s resilience to uncertain global developments. 2008 will be an especially interesting year as we witness the extent of this resilience and the degree to which the region can continue to realize its potential.”
Growth in Latin America may stay above 4% for a fifth year in 2008, according to Bloomberg. The report contends that this expansion is bolstered by growing consumer spending and high external sales of commodities to Asian countries, citing the UN Economic Commission for Latin America.
Latin America is poised to emerge relatively unscathed from the current market turmoil, notes Ackerman. The IIF projects that FDI flows (Foreign Direction Investment) to Latin America this year are likely to match last year’s record of roughly $55 billion. “I am confident that Latin America will come through the difficulties in good condition,” Ackerman says. “In Brazil, the policies introduced to stabilize the economy and decrease vulnerability to shocks from abroad have improved the climate for private investment. Double digit increases in investment, in response to strong demand for Brazil’s exports and robust growth of domestic demand, are driving rapid growth of the economy and further improvement in the country’s fundamentals,” Ackerman adds.
Francisco Gonzalez, President of the Spanish bank, BBVA, agrees with Ackerman. Reuters quotes Gonzalez as saying that opportunities abound in Latin America. Although the region still has some obstacles to overcome before a true “culture of credit” takes root, he says, “Latin America’s financial systems show strength at this time of crisis in international financial markets.”
In fact, BBVA says it expects to gain 7.5 million new Latin American clients by 2010, citing growth opportunities in the region, according to Reuters. The report also states that the bank expects to triple lending to consumers in the same period and more than double the size of its mortgage business.
