After surviving years of economic turmoil, Latin America is gradually shedding its dependence on external forces, such as global commodity and oil prices. The stabilization of commodity markets coincided with the rise of consumerism in Latin America, along with the accelerated growth of economies like Peru and Chile. In the next decade, the continent will witness enormous growth in digital inclusion, urbanization, middle and affluent classes, and cities will have a significant contribution to the economic pie. Furthermore, the declining dependency ratio, advancements in renewable energy capacity, and the high adoption of disruptive business models like sharing models will restore Latin America’s status as a ‘next generation continent’.
This is the finding of a study conducted by Frost & Sullivan, a consulting firm.
Latin America has a significant demographic advantage over regions such as the Middle East, Africa, and emerging Europe, and will play a key role in attracting global investments by 2025.
“A significant accelerator of the economy is the increasing level of mobile connectivity, availability, and penetration, making Latin America the second fastest-growing region globally in terms of the number of mobile phone lines,” said Renato Pasquini (photo), Director of Consulting and Research in Digital Transformation at Frost & Sullivan. “This enhanced connectivity and the relevance of the Internet of Things will create opportunities for small and medium enterprises, as well as for verticals such as e-commerce, smart factories, digital health, and digital governance,” added Malabika Mandal, Senior Research Analyst in Visionary Innovation at Frost & Sullivan.
The economic renaissance of Latin America is not only the result of stable growth in emerging economies and the strong service sector in the region but also of substantial investments from China.
In summary, the prolonged downturn in the commodities market, ubiquitous mobile connectivity, an expanding middle class, and investments from China could make Latin America a $7.3 trillion economy by 2025, according to the study.