Puma Energy, the global integrated midstream and downstream energy company, has commissioned ‘The Changing Face of Latin America’, the latest study in a series of in-depth reports in collaboration with independent economic advisory firm Llewellyn Consulting.
This report centres on the prospects for Latin America, a region with over 30 countries, and the world’s second-most urban region, home to around 10% of the global population, which has become ever more integrated in the global economy. It focuses on the region’s sources of future growth, its potential, and the various challenges it faces, including importantly meeting substantive infrastructure and energy supply needs. In so doing, it maps out investment and broader business opportunities for forward-thinking companies such as Puma Energy.
Latin America has increasingly become immersed in the globalisation process
Over recent decades the world economy has been transformed by the globalisation of international trade and finance, the IT revolution, the evolution of a transcontinental oil market, and a shifting balance of economic and political power between the world’s regions.
Latin America has become deeply immersed in this process and it is no exaggeration to say that it has been one of its success stories. Today, perceptions both within Latin America itself and across the world at large are altogether more positive than 30 years ago, when the region was commonly associated with a litany of missed opportunities, and many countries seemed incapable of breaking out of the ‘middle-income trap’. Since 2008/09, the global financial crisis has been shrugged off without undue trauma. But more importantly, democracy has finally taken root, reasonable macroeconomic stability has been the rule rather than the exception, and the region acts as the primary supplier of food and raw materials for, amongst others, China and India. And longstanding infrastructure shortcomings are being addressed.
Success stories in the region are providing a demonstration effect to others
Recent success stories like Mexico and Chile (both now members of the OECD), Colombia and Peru, and, notwithstanding a recent set-back, Brazil, are capturing the headlines and firing the imagination of policymakers and the public at large. Their progress and development is attracting productive investment, new technologies, and expertise from the rest of the world. These economies, and others that are in the process of implementing structural reforms, are providing a powerful positive demonstration effect to other economies in the region whose desire to expand and progress is strong, irrespective of their stage of development.
Latin America is a growing source of energy demand
Latin America produces around 9% of world GDP and its share of global GDP has remained broadly constant since the mid-1990s, notwithstanding the rapid rise of China and India. As Latin America grows and develops, its demand for energy will increase dramatically. Over the coming 20 years the region’s demand for energy is expected to grow by some 50%, and its demand for oil by over 20%. OECD energy demand, by contrast, is projected scarcely to increase, and the demand for oil to fall, by around 20%.
Latin America still faces significant challenges if its potential is to be fulfilled
Notwithstanding the region’s progress and development, as with all regions undergoing structural change, Latin America must continually confront a range of challenges, not least the recent sharp fall in many commodity prices. If economies are to come close to maximising their potential and grow sustainably, greater sectoral flexibility and diversity remain a priority.
In addition, each country’s structural policies need to evolve as the economies themselves become ever more complex and the world around them changes: minds must remain open to new and better trade agreements; infrastructures need to be modernised; environmental issues need to be confronted; and income inequalities and matters of inclusivity addressed.
Notwithstanding these challenges, the prospects for Latin American countries springing the ‘middle-Income trap’ have significantly improved, and it is likely that the region will play an increasingly important role in the global economy over coming decades.
“Our rapid growth across Latin America has given Puma Energy a strong foothold in some of the region’s fastest-growing markets,” said Rodrigo Zavala, Chief Operating Officer for the Americas for Puma Energy. “Our focus is clear: To deliver oil products to parts of the world where our customers, businesses and communities need them most.”
Adapted from press release by Joe Green