Latin America beyond peak trade

Productivity in Latin America should be supported by strengthening institutions, friendlier business conditions, and a relatively positive environment for entrepreneurship and innovation by developing world standards. However, the region will take time to tackle its headwinds, in particular its large informal economy and numerous public safety issues. It also has poor levels of savings and investment that account for its shallow domestic capital markets. As a result, the region has insufficient, inefficient, and poor-quality infrastructure that has turned into a broader economic Achilles heel.

From an investment perspective, Latin American financial assets have done better than those in most other countries in the past 20 years. The end of hyperinflation and policy shifts to inflation-targeting and floating exchange rate regimes have helped foster growth and reduce vulnerabilities. The focus on low inflation and fiscal prudence should continue in years to come. The development of Latin America's financial industry should result in greater opportunities to diversify and obtain attractive returns.