Emerging LatAm Economies
Investors seeking growth in Latin America often consider Brazil to be the only option. However, this view overlooks the rapidly developing Andean region that includes the economies of Chile, Colombia and Peru. These three countries have enjoyed great success in recent years through implementation of pro-market reforms, reduction of trade barriers and solid political governance that has become a model for the region. Furthermore, the Andean nations are key producers of commodities such as oil, copper, gold, natural gas and coffee, and have been using these natural resources to develop trade agreements and direct investment from major economies like the U.S. and China. The Global X FTSE Andean 40 ETF (AND) provides investors with an option to diversify their Latin America exposure and gain access to some of the most dynamic economies in the region.
Trade and Investment Growth
Export Growth - The total exports by Andean nations increased from $115 billion in 2009 to $183 billion in 2012. In addition to the Colombia- U.S. free trade agreement, Colombia and Peru have also entered into a free trade deal with the EU that is expected to boost their economies by 1% each. (Source: International Trade Centre, Reuters 2012)
Pacific Alliance - The Andean nations and Mexico founded a trading bloc designed to eliminate 90% of merchandise tariffs between them. The remaining 10% are expected to be removed by the end of the decade. The bloc also agreed to eliminate requirements for business and tourist visas, to facilitate easy travel for citizens between these nations. (Source: BBC News May 2013)
Trade and Investment Growth
FDI Inflows - The Andean nations attracted $58 billion of FDI inflows in 2012, a strong increase from just $27 billion in 2007. The region now accounts for 41% of the total FDI inflows in Latin America. (UN Economic Commission for Latin America and the Caribbean, 2013).
Credit Worthiness - Chile, with an AA- rating, is the highest rated nation in Latin America, while both Peru and Colombia have BBB ratings. These countries have also witnessed positive revisions in their ratings in the past year. (Source: S&P April 2013)
Ease of Doing Business - The World Bank's "Ease of Doing Business" indicator, ranked Chile, Peru and Columbia higher than any other South American nations in 2012, based on factors such as investor protection, access to credit, and international trade. (Source: World Bank)
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Investing involves risk, including the possible loss of principal. International investing may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Narrowly focused investments may be subject to higher volatility.
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