2025 begins marked by significant challenges, largely driven by geopolitical factors, such as the return of Donald Trump to the US presidency. These generate uncertainty in international trade and migration. In this context, Latin American countries seek to take advantage of their competitive advantages to strengthen their position in the reconfiguration of global production chains. In this second part of the article “Challenges and opportunities in Latin America”, the sectors with the greatest potential for the region and other key aspects that will mark its economic and strategic future will be explored.
In the first part of the article (published on December 11, 2024) I highlighted the richness and diversity of Latin America, highlighting the opportunities derived from the phenomenon of Nearshoring and the fragmentation of global markets. The changes in the extractive industry were addressed, which is undergoing transformations towards more sustainable and efficient models. In addition, the competitive advantages derived from favorable demographics were mentioned, with a young and growing population that drives consumption and skilled labor. Combined, these factors have created a favorable ecosystem for Latin American countries to position themselves strategically in the global economy.
Also read: Challenges and opportunities in Latin America (1)
The automotive sector and electromobility as an important driver in Latin America
This industry will continue to be a key pillar of the Latin American economy. In recent years, electromobility has driven structural transformations within the industry, with growing demand for hybrid and electric vehicles. This trend opens new opportunities for countries in the region, especially for those that have managed to specialize in the manufacturing of cars and their components. Mexico is positioned as a leader in automotive exports in Latin America, only behind China and the European Union. Brazil also plays a relevant role.
The transition towards more sustainable technologies and the production of electric vehicles are key areas that will further strengthen the competitiveness of the regional automotive sector. Electromobility, another relevant aspect, opens new opportunities in the global value chain, with nations from Mexico to Argentina contributing to this development.
Opportunities in foreign trade for the technology industry
The advance of artificial intelligence and the technological revolution is transforming countless industries. In fact, it is not possible to identify any economic sector in which solutions based on these tools are not being researched, invested and developed. In my opinion, this will also translate into new winners and losers in foreign trade. In this context, Latin American countries have new opportunities for their development. With an emerging ecosystem of startups technological components, the region has begun to gain relevance in the production and export of technological components and software. Countries such as Mexico, Costa Rica, Panama and Brazil stand out for their competitive advantages in key areas such as telecommunications, information technology, health, energy and defense.
Furthermore, access to natural resources such as copper, lithium and rare earths positions the region as a crucial player in the global electronics industry. The creation of hubs technological, inspired by initiatives such as Chips & Science Act of the US, has attracted investments and accelerated the growth of innovative projects. In turn, countries such as Argentina, Colombia, Chile, Peru and Brazil are well positioned to strengthen the development of software and data centers, consolidating themselves as important players in the global digital economy. Countries that establish effective continuing education systems are likely to; a business environment and legal framework that can be efficiently adapted to this new reality; and who invest more (and better) in infrastructure, they will be able to better capitalize on these opportunities.
Taking advantage of the energy transition
Latin America plays a crucial role in the global energy transition thanks to its abundance of key natural resources for the development of clean technologies, such as lithium, copper and renewable energies. Countries like Brazil and Chile are already leading the way with significant investments in solar and wind energy, positioning themselves as key players in the generation of clean energy. Furthermore, the region has the potential to be a key player in the export of renewable energy and biofuel technologies.
The opportunities are not only in foreign trade, but also in local infrastructure needs, where investments could drive economic growth. With an electricity sector already considered one of the cleanest in the world, Latin America has all the potential to be a fundamental pillar in a more sustainable and secure global energy system.
Agriculture as an export engine
Agriculture will continue to be a fundamental pillar for Latin American and Caribbean exports. The region is the world’s leading net food exporter, with shipments abroad reaching $400 billion a year. Among the key products are corn, soy, sugar and meat, with Brazil and Argentina standing out as the largest exporters of the first two goods; Meanwhile, Mexico leads exports of beef and other fruits and vegetables with high demand (e.g tomato, avocado, blackberries and lemon, to name a few).
Despite the importance of this sector, the countries of the region will have to face the challenges of climate change, which could alter agricultural production. However, a positive effect of these challenges would be the impulse towards the transformation of the offer towards processed products, adding value and diversifying the regional food industry.
Emerging industries in Latin American exports
In addition to technology, the automotive sector, agriculture, electronic components, household appliances, the metal-mechanical industry and other specialized manufacturing; Other industries with high potential in Latin American exports include biotechnology, precious metals mining, renewable energy and space technology. Biotechnology, with its focus on health, food and the environment, is gaining relevance in countries such as Brazil and Argentina. Lithium mining, key for batteries, positions Chile and Bolivia as important players.
In conclusion, Latin America faces a panorama of challenges and opportunities that will define its economic and strategic future in the coming years. Despite risks arising from geopolitical factors and climate change, the region has key strengths. Among them, its productive diversity, natural resources and an emerging technological sector. Sectors such as electromobility, agriculture, renewable energy and biotechnology offer great opportunities to diversify exports and position Latin America as a key player in the global economy, provided that their competitive advantages can be strategically leveraged.
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Alejandro Padilla is President of the Economic Policy Commission of the International Chamber of Commerce Mexico and Deputy General Director of Economic and Financial Analysis of Grupo Financiero Banorte. The opinions expressed in this document are the exclusive responsibility of the author and do not represent the opinion of ICC México or Grupo Financiero Banorte or their subsidiaries or affiliates.
Twitter account: @alexpadillasan
The opinions expressed are solely the responsibility of their authors and are completely independent of the position and editorial line of Forbes Mexico.
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