2014: a year in data – LatAm
Mexico outscores Brazil
Four years ago, Brazil had one of the world’s most dynamic economies, while low-growth Mexico was shunned by EM investors seeking higher returns elsewhere. Fast forward to 2014, and Mexico is now the poster child of the emerging markets following a series of ground-breaking economic reforms. In Brazil, growth has slowed to a trickle against a backdrop of policy deadlock and a deeply divisive Fifa World Cup. Euromoney Country Risk data illustrate how changing perceptions of the two countries’ risks drove performance of the domestic equity markets.
Investors should take note: LatAm’s big two have been offering contrasting portfolio options for some time. This year is no exception.
Mexico’s government has introduced a swathe of structural reforms that aim to cut key input costs in the economy, arrest deteriorating productivity and improve the country’s long-term growth rates. However, it is the finance minister’s recent energy reforms that have most made economists and investors buoyant about the outlook for Latin America’s second biggest economy.
Mexico’s energy reforms should kick-start growth in its lacklustre economy while Brazil appears to have no strategic planning in place.
Post-election policies still hard to predict; fiscal discipline key to investments.
Strong growth expected from banks; Attractive market for foreign investment