Doing Business to Latin America in 2023

Doing Business to Latin America in 2023: Key Insights Latin America is a vibrant and diverse region offering numerous opportunities for businesses in 2023. With its growing economies, expanding middle class, and increasing digital adoption, the region is attracting global attention. However, doing business in Latin America also comes with its unique set of challenges. Here’s a comprehensive look at the key insights for doing business to Latin America in 2023. The following are the most important events to monitor in LATAM: Brazil removes all fiscal anchors: Our base is that Brazil will relax its current fiscal framework to allow for more government spending, but that new rules will still limit how much spending can increase in a given year. Our downside scenario would be that Lula's government manages to break free from any spending cap. This would lead to a much weaker currency and push Brazil closer to a debt crisis down the line, leading to sharper budget cuts and tax increases already during Lula's term. LATAM concentrates emerging-market (EM) investment: With both the US and Europe careening toward a recession in 2023, potential escalation of the war in Ukraine affecting neighboring countries, China remaining in lockdown, the MENA region suffering from high-inflation and heightened FX volatility, and Russia written off in global investment portfolios, suddenly LATAM feels like a safer investment bet. In this scenario, LATAM could become the top FDI destination, only trailing the US, Europe, and Developed Asia Pacific in absolute US dollar terms. Nearshoring doubles Mexico's FDI: Mexico is the best-positioned country in LATAM to capture divestments from Asia manufacturing among companies willing to better serve the US market. In an upside scenario, Mexico would see foreign direct investment (FDI) at least double relative to 2022 levels in 2023, boosting the country's manufacturing sector, employment,...