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Latin America Business: Best in 2022
The best news in Latin America business in 2022.
BY LATINVEX EDITORS
The best events in Latin American business this year, according to Latinvex editors.
#1 ELETROBRAS PRIVATIZATION
In one of the most important events the past 10 years, the Brazilian government in June privatized state electricity company Eletrobras (the largest electricity company in Latin America) through a $6.9 billion share sale. It was the largest privatization in Brazil in two decades and the second-largest ever after the 1998 privatization of state telecom company Telebras.
#2 CHILE REFERENDUM
In September, a clear majority of Chileans voted down a proposed new constitution, to the relief of local and foreign investors.
“The proposed changes would have meaningfully weakened checks and balances, property rights and the ease of doing business in a country long considered friendly to private enterprise,” Alejo Czerwonko, Chief Investment Officer of Emerging Markets Americas at UBS Global Wealth Management, wrote in a Wilson Center blog republished by Latinvex.
An early stage proposal called for the nationalization of the country's copper industry. "The proposal adopted is barbaric, with clear and obvious legal errors," Diego Hernández, president of Chile's National Mining Society, said in February.
While acknowleding the resounding rejection of the proposal, President Gabriel Boric pledged to try to reform the contsition again, albeit with different proposals.
This week, the government and opposition lawmakers announced an agreement to begin drafting a new constitution, would be submitted for referendum in November or December next year, Reuters reports.
Since 62% of voters rejected the radical proposal, the new one needs to tone down the most controversial parts and thus is expected to be more lenient to business.
#3 DOMINICAN STAR
The Dominican Republic managed to post another strong year, setting new record in tourism arrivals, while other metrics also improved.
Moises Naim, a distinguished fellow at the Carnegie Endowment for International Peace, called the Dominican Republic a “surprise country” in a speech in October.
The Dominican Republic led Latin American growth on the 2022 version of Nation Brands from UK-based Brand Finance. Its country brand gained 21% to $74 billion this year.
“In September 2021, the Dominican government launched its nation brand strategy in the United States based on five pillars: Investment, Exports, Tourism, Culture, and Citizenship, with which the Dominican Republic presents itself as a preferred destination for business and investment as well as tourism,” BrandFinance pointed out in its new report on Nation Brands.
Fitch Ratings also singled out the country's strong position.
“Diverse exports, FDI inflows, and strengthened external liquidity have supported the sovereign in the face of external shocks and global monetary tightening, and remain important in mitigating external risks as the US economy slows,” it said in a report in October.
FDI inflows in the first half amounted to $1.8 billion, with the near-shoring of US supply chains as well as tourism, mining and infrastructure investment contributing, Fitch says.
The key tourism sector has been booming. During the first 11 months this year, the Dominican Republic received 6.4 million tourists, up 9.8% compared to the same period last year, according to official data. An additional 1 million cruise visitors arrived, up 14,5%.
All in all, the economy is likely to grow by 5.1% this year, according to estimates from the UN Economic Commission for Latin America and the Caribbean (ECLAC).
#4 GUYANA BOOM
Guyana’s economy is expected to grow 57.7% this year, according to the IMF. That’s a new historic high for the country and the world’s highest rate.
The offshore oil deposits, which Exxon Mobil Corp. first successfully drilled in 2015, are so large relative to Guyana’s population of 780,000 that some projections show the country on track to overtake Kuwait to become the world’s largest per-capita crude producer, Bloomberg reports.
Guyana plans to use the influx of funds to build roads and infrastructure to open up other areas of the economy, including its gold, diamond, bauxite and copper mines, President Mohamed Irfaan Ali said during a US trip earlier this year.
#5 URUGUAY GROWTH
With Argentina’s economy continuing to suffer, neighboring Uruguay is seeing record investments from Argentines, including in real estate and banks.
Meanwhile, its president wants to sign free trade agreements with China and Asia – in a move that would make it independent of the Mercosur trade block, which also includes Argentina, Brazil and Paraguay.
Mercosur has suffered from constant quarrels between Argentina and Brazil. Its only major achievement – a free trade agreement with the European Union – has been delayed for more than 25 years.
"We cannot wait 25 years to sign an agreement. It is neither serious nor credible," Uruguayan president Luis Lacalle Pou said during a Mercosur summit this month.
His Urgent Consideration Law, which includes labor and financial reform, was opposed by unions. They tried to stop it through a referendum, but the vote in March upheld the law.
Uruguay’s economy is expected to grow 5.4% this year, according to estimates from the UN Economic Commission for Latin America and the Caribbean (ECLAC).
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