Latin American companies increase investments in Spain

The Development Bank of Latin America (CAF) has organized the breakfast chat "Spain and Latin America in the international scenario: More of the same? Or neither the same nor similar?" under its strategy to share knowledge on the economic outlook of Latin America and Spain and the international context.

Rafael Doménech, head of Macroeconomic Analysis at BBVA Research and Germán Ríos, CAF's Corporate Director for Strategic Affairs, recalled what they had already spoken about during the meeting held last December: Latin America and Spain have a window of opportunity to forge an alliance against the complex international context and jointly influence the future of the development of both territories. This time, they emphasized that "the improvement of the global economy positively affects the position of Latin America and Spain, which, despite global risks, now have an opportunity to strengthen relations between the two regions."

Guillermo Fernández de Soto, CAF's Corporate Director in Europe, highlighted the excellent relationship between Latin America and the European Union, particularly Spain. The executive emphasized that such relations must continue to grow in the fields of investment, trade, and cooperation for development.

He also indicated that, considering the new global reality, it is essential to strengthen regional integration across Latin America. Guillermo also pointed out that the reforms to which the EU has committed are a clear opportunity to advance a Strategic Bi-regional Partnership, in which Spain must be a privileged player. If both regions advance in their tasks, this Strategic Partnership may be one of the transcendental themes of the next Europe-Latin America Summit, which will be held in October 2017 in El Salvador.

CAF's Corporate Director in Europe highlighted the following priorities: promoting bi-regional relations at an institutional level, supporting the private sector of both regions in their internationalization process, and advancing in the goal of consolidating CAF as a benchmark in terms of knowledge, exchange of experiences and good practices. "This breakfast event is a good example of how this can be achieved," he said.

During his presentation, Rafael Doménech focused on the outlook of the global economy, particularly in Spain, highlighting three main points. Firstly, "the global economy is growing and improving, which presents opportunities for Latin America and Spain, despite the risks and volatility." Secondly, "the Spanish economy has been growing consistently and could surpass early estimates of 3.2% by 2017. A rate of 2.7% is forecast for 2018".

Thirdly, he stressed that "the improvement of the foundations of Spain's economy, its growth, creation of jobs, and gains in competitiveness and productivity are partly due to the reforms implemented." Rafael also stated that "although the reforms have had positive effects, there are still major imbalances that must be corrected to boost Spain's potential growth."

Next, Germán Ríos focused his presentation on the economic outlook of Latin America and the Caribbean and the opportunities to strengthen Ibero-American relations. Regarding Latin America and the Caribbean, he said that, while it is true that the economic outlook appeared to improve, driven mainly by the recovery in global demand, several sources of uncertainty and volatility remain that could impact the region. He also stressed that "a sound macroeconomic management is one of Latin America's main assets, as it is using monetary and fiscal policy to cushion the risks in the international setting".

Domestically, he pointed out that "the region has a pending task: to increase its productivity to continue the fight against poverty and to consolidate the still vulnerable middle class." A key factor is infrastructure, where the region's gap with respect to other developing economies is significant. According to estimations by CAF, increasing investments to more than 2% of GDP is necessary to close such gap. With this goal in mind, the majority of Latin American countries have designed investment plans that offer attractive opportunities to Spain's business community, which has a significant presence in the region with an investment stock of more than 144,000 million Euros and a great 'know-how' to apply in the region.

In closing his presentation, Germán Ríos stressed that opportunities to strengthen these Ibero-American relations are seen on both sides of the Atlantic, not only due to a strong business presence of Spain and Portugal in Latin America, but also because of the jump by 'Multilatinas' to Europe where "according to the ECLAC, the value of mergers and acquisitions undertaken by 'Multilatinas' in Europe between 2010 and 2015 reached 49 billion Euros, of which 50 percent was allocated to the Iberic peninsula." This is undoubtedly a good moment to consolidate Ibero-American relations.