It has been an exciting few weeks for OCO Global following the launch of the new OCO Global Latin America office in Bogota, Colombia.
We’re proud to boast a global network of offices across London, Paris, Frankfurt, Tokyo, Dubai, New York and Belfast – but this exciting move opens up a major new region for us.
It means we will be able to unlock new opportunities in a region which is forecast to enjoy substantial growth in the next few years. We will be launching our Global Market Accelerator Programme (MAP) to provide market-entry and trade development support to clients interested in expanding in Latin America.
The move will also allow us to offer in-market consulting and training services aimed at Latin American EDOs interested in implementing the best trade and FDI practices.
The question of why we chose Latin America is simple enough. The region has excellent growth forecasts, driven by a booming middle class and a significant growth in its disposable income, which will create business opportunities within sectors such as food and beverages, automotive and consumer goods.
The Economic Commission for Latin America and the Caribbean (ECLAC) is expecting faster growth from the countries in Central America (on average 3.6%) and some of the key economies of the Pacific Alliance such as Colombia (2.1%), Perú (2.5%) and Mexico (2.2%). The outlook is somewhat more variable in the MERCOSUR but remains in positive territory.
Factors driving growth will include the recovery of the world economy (forecast to grow at a 3.7% rate in 20172) and the picking up of global trade volumes, expected to reach 2.4%.
Likewise, commodity prices are expected to rise up to 12% on average compared to 2016, particularly energy prices (19%), metals and minerals (16%) and food prices (3%), and that will be good news for the economies of south America whose export baskets are highly concentrated on commodities.
A pick-up in commodity prices (i.e. oil & gas, minerals, agri-food, etc.) will probably boost the extractive industries in Mexico, Peru, Chile and Colombia, creating opportunities for suppliers of such industries. In fact, most of the countries of the region are net importers of machinery and equipment and the market for tech products is growing rapidly across the region, so there are many trade opportunities waiting to be unlocked with the help of OCO Global.
This move is also very timely as we believe the wave of protectionism and economic uncertainty across Europe and North America will spur Latin American countries to further diversify their trade relations, while also trying to boost intra-regional trade. This is the region of the world that trades least with itself.
We are particularly optimistic about the prospects of the Pacific Alliance, a trade bloc made up of Chile, Mexico, Colombia and Peru and which is quickly becoming a trade and investment powerhouse. It is becoming an increasingly integrated market with ever closer ties with the US and the Asia Pacific markets.
Similarly, we are seeing an interesting re-launch of the MERCOSUR’s trade agenda, promoted by the current administration of Brazil and Argentina, which have become more open to free trade. How MERCOSUR and the Pacific Alliance trade blocs interact with each other will shape the economy of the region in the near future.
It is probably too soon to assess how the new wave of protectionism in the US will impact the region, particularly when it comes to the re-negotiation of NAFTA, but we expect that probably Mexico (and to some extent some other economies in Central America) will be hardest hit by trade barriers with the US, both in competitiveness and attractiveness for FDI.
South American countries will have less to fear as China has replaced the US as the major trade partner of the region – so they appear to be adopting a ‘wait and see approach’ for now. The upcoming presidential elections in Chile, Mexico, Brazil and Colombia will help to clarify the business outlook in the region very quickly in 2018.
Why Colombia in particular? It was a deliberate choice, as we believe the recently concluded peace process in Colombia will create huge business opportunities when it comes to infrastructure development, rural development and extractive industries in areas that would once have been affected by the conflict.
As a company headquartered in Northern Ireland, OCO Global has experienced first-hand what a “peace dividend” means and this strategically positions us to unlock Colombia’s emerging business opportunities.
OCO Global’s CEO Mark O’Connell says: “OCO Global have worked in a number of LatAm countries over the last decade and I have found that Colombia offers the most stable, transparent and progressive business environment, access to talent and skills, outward looking and a genuine shared national ambition to growth and prosperity.”
If you want to talk about how OCO Global Latin America can help you on your journey, just get in touch!
