Marktbericht Lateinamerika May08

The largest Latin American countries have been able to sail through the first quarter in relative tranquility.

Executive Summary

Foreign direct investment in Latin America accelerated in 2007. Most investors are targeting growth stories – in particular, investors want to take advantage of the rise of the region’s middle class, which has led to increased consumption.
Latin America’s economies are strong in contrast to the slowdown in the global economy. Local businesses are expanding in response to strong consumer demand, which is fueled by income growth and the availability of credit.
Rapid growth, however, has led to rising inflation, prompting central banks to raise interest rates. The result is higher reference rates in the region in contrast to the U.S. and Europe, where interest rates moved down since last year.
The U.S. subprime meltdown has had little effect on Latin America’s mortgage markets. Mortgage financing and housing sales are growing rapidly in Mexico, the region’s most developed housing market, and in Brazil.
The retail market is drawing a significant share of attention from foreign investors, but other sectors also are strong. Office markets show sound absorption and rent levels. The industrial sector benefits from the need for local and international firms to rearrange logistic channels to be closer to the end consumer in the U.S. or Latin America.