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13 for 13: Predictions for Latin America in 2013

13 for 13: Predictions for Latin America in 2013

13 for 13: Predictions for Latin America in 2013

As we prepare to step onto the 13th floor of the 21st century there is much speculation and diverging opinions regarding what the New Year will bring to Latin America. Our senior consultants ? who provide corporate communications, public and government affairs and regulatory policy advice to major multinationals across the region ? are never short of an opinion or two. We have collected some of our most candid thoughts and created a list of

13 predictions for Latin America for 2013*?

01. Transition in Venezuela

As details emerge about the seriousness of Chavez condition, we expect a new Presidential election to be triggered in the first part of next year. As his anointed successor, Vice President Maduro is likely to contest these elections and is likely to secure considerable popular support. But given the current momentum for change and the tough economic outlook, we think 2013 will see an opposition candidate stepping up and securing the Presidency for the first time in 13 years.

02. The Andean Surge

We will see continued dynamic growth as well as increased international interest in the trifecta of Colombia, Peru and Chile as their governments continue to implement market-friendly policies. The level of growth in these countries will be largely dependent on copper prices staying high, unlike other commodities. In parallel, growth will slow or remain at low levels within the LatAm behemoths of Brazil and Mexico.

03. Brazilian expansion oversees

Brazilian companies, flush with cash, will aggressively seek to expand their global operations through direct investment and acquisitions. The increased competitiveness of Brazilian goods due to a combination of government stimulus packages for local industry, the depreciation of the Brazilian Real and the increased government focus on PPPs and technology transfer will also result in a marked increase in non-commodity exports.

04. Grown-up politics in Mexico

In contrast to what is going on north of the border and in the EU, Mexico´s new president, Pe?a Nieto, recently signed a pact with the country´s leading political parties, a move that broke through years of political deadlock in Congress and a reliable sign that tangible economic reforms can be expected in 2013.

05. European courtship of LatAm countries

The economic doldrums in Europe, almost certain to continue for the foreseeable future, have realigned priorities and European governments are placing increasing focus on the emerging markets of LatAm and will confirm this priority with a flurry of state visits and subsequent trade agreements.

06. Growth in private healthcare and education

The ever-growing middle class in the region has come to expect better quality of life and their disappointment with the quality of healthcare and education provided by the state will lead ever increasing numbers to seek out private healthcare plans for their families and private education for their children. In response to this pressure local governments will also seek to expand investment in these vital areas.

07. Expanded credit to continue

As global demand for commodities has dropped, LatAm economies have been largely fueled by domestic consumption which has been encouraged by unprecedented stimulus packages and low credit rates. While this trend will eventually taper off, we forecast that these policies will continue unabated throughout 2013; particularly in countries like Brazil where President Dilma has seen the country´s growth shrink every year since taking office and will need to maintain her popularity in the second half of her mandate.

08. Expanded shale gas exploration

The U.S. shale boom will have ripple effects in LatAm and we will see increased investment and exploration in countries in the region with proven reserves. These include Mexico, Argentina and Brazil, with Argentina on the brink of a major agreement with Chevron and other global energy players and countries set to follow suit.

09. Anti-corruption trend in Brazil

We cautiously predict that Brazil has turned the proverbial corner and recent events, including the conviction of very high-ranking officials, unprecedented cases in police agencies and Dilma´s highly popular no-tolerance policy towards corruption in her own cabinet, have set Brazil on a new anti-corruption path that the voting population will not allow to be reversed.

10. Default in Argentina

Due to the recent court battles Argentina has lost against the so called "vulture funds" it appears that the country will have to pay out upwards of $1.3 billion or default on loans dating back to the financial meltdown a decade ago. Statements made by Argentine president Cristina Kirchner and her government´s political position in similar situations lead us to believe payment will not be made; this will result in a de facto default on portions of Argentina´s national debt.

11. Expansion of the middle class

The economic growth in the past decade has created a burgeoning middle class which has, for the first time in history, become the largest demographic in most LatAm countries. The purchasing power of the middle class will continue to balloon in 2013 with 81% of respondents to a recent survey stating that 2013 will be better for them financially than 2012 and that they intend to invest in a new cell phone, TV, car and a holiday over the next 12 months.

12. Peace agreement with FARC in Colombia

Despite admittedly huge hurdles and challenges, the peace talks between FARC and the Colombian government appear to have got off to a good start and the potentially enormous economic benefits that a permanent peace would usher in lead us to predict that common ground will be reached in the coming year. President Santos, whose popularity has waned of late, has a vested interest in seeing these talks succeed.

13. Felipe Scolari sacked

As important as football is to the region, our list would not be complete without an insight on this topic. With Brazil´s tendency to do poorly in the lead-up to World Cup and its propensity to trade coaches after a hard loss, we conjecture that Luis Felipe Scolari will be sacked as head coach of Brazil´s national football team before December, 2013. Despite this, Brazil will, of course, win the 2014 World Cup.

Wishing you the happiest of holidays and all the very best for 2013!

For more information on Speyside and the services we provide throughout the LatAm region, please visit our website at www.speysidecr.com or subscribe to our Twitter feed (@SpeysideCR). To discuss a potential requirement for support and learn more about our business please contact:

Ian Herbison

Ian Herbison

Fiona McCollum

Disclaimer: This document contains forward-looking statements that involve risks, uncertainties and assumptions. If such risks or uncertainties materialize or such assumptions prove incorrect, the results could differ from those expressed. Except for the football. There?s no doubt we?re right about the football?

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