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April 14, 2016
With the 2014 World Cup in Brazil getting underway, the majority of the world’s eyes will be glued to television sets around the world as they watch their country with the highest hopes. The World Cup being played in Brazil is as if the beautiful game is returning to its spiritual home and is an exciting and nail biting time for Brazilians, the nation of Brazil and all those involved. However, it would be wrong to think that the World Cup is just about football as there are major challenges and opportunities in Brazil as a result of being the host country. This balance of challenges and opportunities is a familiar situation which is currently flowing throughout the region of Latin America.
There is no doubting the fact that Latin America has come a long way in recent years. In spite of some social, political and economical problems seen in the region of Latin America, it is certainly enjoying some of its best years. For example, an impressive 35 million people have been lifted out of poverty over the last decade in Brazil and unemployment in Uruguay has dropped to 6% and is approaching full employment. This last fact in particular is in stark contrast with the austerity measures introduced throughout Europe as countries such as Spain struggle with rising unemployment rates.
Similarly to the UK, the nations of Latin America cannot afford to stand still if it is to improve and maintain its competitive position. Therefore, policymakers across the region have to work together and diligently in order to introduce the structural reforms required to increase growth, tackle inflation rates, boost their productivity and meet the rapidly rising social expectations. Although historically the UK and Latin America have had a close relationship, the influence or presence of the UK in the region has fallen, allowing other nations such as the United States and Germany to overtake the UK in their presence. The UK is working hard to build stronger business relationships in Latin America in order to bring about growth in their influence in the region, but there is still a long way to go.
Across a wide range of sectors for British exporters lie a number of immense opportunities in Latin America. From infrastructure and energy to education, legal services and insurance markets, the UK exporters can take advantage of the sometimes complex Brazilian market. With a growth in demand in Brazil for basic financial service products by the expanding middle-class, a whole market of opportunity is waiting to be explored. For example, in Brazil over 50% of all cars are uninsured whilst a similarly high proportion of the economy in Mexico remains informal and effectively operating outside the tax system. As Latin American businesses continue and begin to internationalise, they will be searching the market for access to innovative long-term financing options; something that Britain can work towards providing.
The UK can share global best practice across a number of services needed throughout the lifecycle of an infrastructural project. Through PPP and other financing models, British expertise in delivering bespoke solutions can help support ambitious investment plans across Latin America in a range of markets from transport and energy to healthcare and housing. There is a number of energy opportunities for British companies in Latin America too as some of the largest urban populations can be found in this region. In Mexico for example, the government’s energy reforms tries to confront this challenge head on, by attempting to stimulate growing employment rates by attracting private sector investment into the energy market and boosting its production. In Brazil and Uruguay, attempts can be seen in their efforts to increase their renewable energy output in order to improve the security and sustainability of their energy supplies. UK firms across the board can successfully compete in this opportune market.
Although there is more chance of seeing the likes of Argentina, Brazil, Mexico or even Uruguay lifting the World Cup trophy than England; in economic terms, there is no reason to continue the rivalry that will be played out on the football pitches across Brazil. Off the pitch, British companies can unlock Latin America’s full potential that will deliver mutual economic successes and the formation of closer partnerships. The success of England’s World Cup run remains to be seen, however they can guarantee something even more long-lasting which would be their influence and presence in one of the world’s fastest growing markets.
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