Despite hiccups, Latin America heading for growth

Aug. 29, 2013 at 3:07 PM
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RIO DE JANEIRO, Aug. 29 (UPI) -- Brazil may be slowing down and Argentina may be struggling with its foreign currency holdings, but Latin America on the whole is heading for strong growth, new research indicates.

An upbeat prognosis on growth in the region including South America, Central America and adjoining Caribbean states follows research conducted for UPS by TNS Gallup.

The study forms part of the latest UPS Business Monitor Latin America directory that looks into prospects for business, including opportunities for the logistics firm.

Technology and construction continue to be identified as the industries with the greatest growth opportunity according to the surveyed executives in Latin America.

Nonetheless, when compared to the results from the 2011 BMLA study, business services fell to fifth place and was replaced this year by leisure and tourism as a sector with more growth opportunity.

Leisure and tourism is seen in Brazil as a major growth area between now, next year's FIFA World Cup and the 2016 Summer Olympics. However, businesses and the government of President Dilma Rousseff are locked in an ongoing tussle over getting the priorities right. Critics warn Brazil may squander major business opportunities offered by the tournaments if it doesn't address demands for infrastructural reforms, tighter security and a more even distribution of income to forestall social unrest.

Analysts see Latin America region as still a largely untapped market for many sectors of business in North America and Europe. Canadian and U.S. companies are forever trying to tap into the region's emerging markets where some new entrants without Portuguese or Spanish language skills are bedeviled by the linguistic barriers.

EU's spiralling unemployment has become a headhunting opportunity for Latin American businesses as they consider rich pickings from economically troubled Portugal and Spain. Analysts say the impact of skilled European migration into Latin America and its effect on business growth in the area is yet to be measured.

About 70 percent of small and medium-sized companies surveyed believe businesses in Latin America will grow strongly in the next 12 months, up from 62 percent in 2011, UPS said.

It's produced an outlook on the current opinions, attitudes and trends among the business leaders of the small and medium-sized enterprises in the region.

The study, commissioned by UPS and conducted by TNS Gallup between April and May 2013, surveyed more than 800 top-level small and medium-sized firms' executives in seven Latin American and Caribbean countries. The results revealed that almost half of the respondents believe their business is better today than a year ago, especially in Chile at 64 percent, Mexico 63 percent and Colombia at 51 percent.

"The results from the latest BMLA study demonstrate an increase in Latin American SMEs that foresee growth in their businesses over the next 12 months compared to 2011," UPS Americas Region President Romaine Seguin said.

"We are seeing businesses betting on their own countries and region through their investments," Seguin said. Nearly half of Latin American executives surveyed do not feel that the economic and financial context of developed countries will affect their businesses showing real confidence in growth, Seguin added.

Though the positive outlook for business growth increased from past years, small and executives continue to face some of the same issues they had expressed in previous installments of the study.

For example, Brazilian SMEs remain concerned about finding and retaining qualified personnel, while Argentine executives continue to mention an increase in labor costs as their top worry. This year, Colombians showed that market slowdown is their main concern.

"Latin America has come a long way over the last few years; they have a new sense of self, both politically and economically, and you can see this in the optimism revealed by SMEs across the region," said Eduardo Gamarra, professor of Latin American and Caribbean politics at Florida International University, who serves as an expert for the BMLA study.

Although adoption of information technology was identified by 84 percent of the surveyed executives as a "very important driver for competitiveness," only 14 percent considered it an investment priority. However, investment in marketing and sales is seen as a top priority.

Businesses also fret over fiscal constraints and taxation issues which they see as barriers to growth.

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