Visit the global automotive industry news blog with Brazil automotive industry news and Mexico automotive industry news.





GlobalAutoTV
Click to watch Ricardo Castro-Garza -
Click to watch Ricardo Castro-Garza -
latin resources

Need an office in Mexico or Brazil? Office suites, meeting rooms, virtual offices, network access



free downloads
LATIN AMERICA: "Impact of Proposed Mexican Tax Reforms on Maquiladoras and Their Foreign Principals"

LATIN AMERICA: "Impact of Proposed Mexican Tax Reforms on Maquiladoras and Their Foreign Principals" article.

proceed to download
eJournals







back to index backLATINtalk February,  2012


Latin America 2012: Germany’s Perspective

Good outlook, but marred by growing protectionism.

Worldwide recession, the evolution of commodity prices and competitive Chinese industries were the prevailing factors to influence Latin American economies in 2011. Additionally, a declining internal demand in Brazil, Latin America’s biggest economy, affected the markets of the subcontinent. As a consequence, certain economies have started protecting their markets by complicating imports or rising tariffs. These factors will likely continue affecting German business in the region. In 2012 the evolution in commodity prices, external demand, inflation and exchange rates will influence Latin American markets. If these fields do not evolve in a favorable way, the region’s politicians will presumably react with even more protectionist measures. German companies are invited to observe how these fields evolve and should be prepared to cope with possible measures that hamper imports.

At the same time, due to a rising demand of an emerging middle class, Latin America holds a wide range of business opportunities to German companies. In order to achieve a higher living standard, Latin American households have been increasing their demand for high-quality products. In this regard, German high-standard products can benefit from this rising demand. Still, one has to keep in mind that this higher consumption is not necessarily the result of a higher income. It is rather often financed by credits and followed by rising inabilities to pay the debts.

Along with business opportunities that evolve from the rising middle class, there are several other fields where German companies can be successful in 2012: Especially in Argentina and Brazil, the food industry is on the rise. Brazil offers opportunities in its shipping industry and its “pre-salt” oil development. In Colombia, the petrol and carbon sector is booming, but also the tourism sector is growing at impressive rates.

BRAZIL OUTLOOK

Even though the Brazilian economy has suffered a setback in the second half of 2011, it is already recovering and attractive to German business in 2012. Infrastructure programs, tremendous raw material deposits combined with a growing demand of an emerging middle class, declining inequality and a rising educational level boost the  economy. In this context, German high-standard products can be of particular interest to satisfy the emerging middle class. Due to its protectionist measures which include high import tariffs it is [more] favorable to start a local production. Furthermore, even though the big orders are already assigned, there are still business opportunities in the supplying industries related to the major events FIFA World Cup in 2014 and the Olympic Games in 2016.

KEY CHALLENGES IN LATIN AMERICA

As already mentioned above, protectionist measures are presumed to be further influencing German business in 2012. Especially German enterprises based in Argentina have to take into account that the Argentinean government might introduce further measures similar to the already existing one-to-one regulation that forces companies to export goods with at least the same value as their imports. Still, the protectionist policy is not present for the whole region – on the contrary, countries such as Mexico and Chile are precursors in the promotion of free trade.

Another challenge may be the global competition for economic cooperation with Latin America: Due to its [successful handling] of the global economic and financial crisis as well as its importance as a commodity supplier, business in and with the region is attractive for countries all over the world. Although “Made in Germany” still enjoys a good reputation, concrete conclusions of contracts will depend on attractive offers.

KEY CHALLENGES IN BRAZIL

This year it will be particularly challenging for German companies to cope with the protectionist measures the Brazilian government has taken to boost national economy. In order to stimulate national production and hinder foreign producers to congest the Brazilian market with low-priced goods, the government has taken measures such as rising tariffs and thereby complicating imports. This makes it particularly difficult for German exports to enter the Brazilian market. To avoid these regulations it can be advantageous to start producing locally in Brazil. Besides the protectionist measures, the prevailing complicated tax system will still be defying German business in 2012.

Source: Latin Business Chronicle - GAI





previous page

go top
search our site


Loading

LATINtalk

Other articles from the same issue (February,  2012).

Suppliers eye Brazil, Mexico
play read on

Brazil stance threatens trade pact
play read on

Brazil and Mexico Look to Rewrite Auto Trade Pact
play read on

Mexican auto output rises 1.2pc in January
play read on

Argentine 2011 car sales in domestic market set to establish a new record
play read on

South American Consumers Wooed by China's Low Cost Cars
play read on

These are North America's top producing auto plants
play read on

40 auto parts factories to be installed in México
play read on

Latin America 2012: Economic Outlook
play read on

Mexico’s Manufacturing Base Rebounds
play read on

Mexico Improves Competitive Position against China
play read on

Latin America 2012: Germany’s Perspective
play read on

Regulatory Reforms Help Fuel Brazil’s Economic Engine
play read on

Argentina and Brazil want corporations to reinvest and not send profits overseas
play read on

Investment in Brazil - report
play read on

Confronting Complexity: Mexico
play read on

Mexico's Presidential Election and the Cartel War
play read on

Seven Things You Won’t Like About Latin America
play read on

Mexico: High Stakes Situation
play read on

Brazil: Overtime Law Could Have Monumental Impact… or Merely Minor Effect
play read on

Latin America Corporate Treasury Benchmarking Study 2011
play read on

Country Profile: Brazil (report)
play read on

Country Profile Summary: Mexico (report)
play read on

New Trends on Collective Terminations in Brazil
play read on

Collective negotiation in Argentina – Forthcoming salary negotiations
play read on

Brazil’s Cash Management Operating Environment
play read on

Mexico’s Cash Management Operating Environment
play read on

Brazil: Rousseff promises fiscal and credit stimuli to promote exports and innovation
play read on

Argentina limits daily financial transaction per person to 1.000 Pesos (230 dollars)
play read on

EU and Mercosur hope they can reach a trade agreement by the end of 2012
play read on

Brazil Unemployment Rate Falls To Record Low In Dec, 2011
play read on

Argentine economy expands 8.8% in 2011; capital outflow reaches 21.5bn dollars
play read on

Migrants’ New Paths Reshaping Latin America
play read on

Mexico City Airport Improves
play read on

Latin America Update: global headlines
play read on


Our Free eJournals
GlobalAutoExperts

To visit GlobalAutoExperts Directory, click here.


©2008 GlobalAutoIndustry.com | HCI Group, Ltd.
101 West Big Beaver Road, Suite 1400 | Troy, MI 48084 USA
USA Tel: +1.248.687.1060 | USA Fax: +1.248.927.0347
Fax UK: +44.(0)845.127.4765 | Fax Europe: +31.20.524.1659 | Fax Asia: +852.3015.8120