Despite some turbulence, Latin America remains an attractive destination for infrastructure investment, if the right areas can be identified.

Risk/reward indexes can simplify the process of comparing and ranking each country in the region.

"Most countries in Latin America have a wealth of natural resources, and while some have larger markets, others have more favorable policies," said Benjamin Duyck, AEM director of market intelligence. "To help members compare various countries and their markets, AEM offers risk/reward indexes, provided by BMI, accompanied by in-depth analyses."

Based on these indexes, in 2014 the top 5 countries in the region for infrastructure investment were:

  • Colombia
  • Mexico
  • Chile
  • Peru
  • Costa Rica

More Changes in Store for 2015

Duyck noted, however, that markets are fluctuating and ever-changing. For example, a comparison between 2010 and 2014 shows:

  • In 2010, Argentina fetched a great infrastructure risk/reward score; in 2014, it ranked 8th in the region.
  • In 2010, Brazil ranked second in the region; in 2014, as the political climate changed, it fell to 6th.

"For 2015, we are looking at even more changes," Duyck said.

"With falling oil prices, there is an increased risk to public investment, especially for oil-producing nations," he said. "While Colombia and Mexico have a solid business environment, Venezuela has not, reducing its score to the second-to-last spot in the region."

Crude Prices Can Hurt, Help Markets

According to BMI, he said, equipment manufacturers can expect the negative implications for infrastructure investment from lower oil prices to be far more significant in those countries with limited private capital engagement in the sector.

"While Venezuela and Ecuador are the countries with the most to lose in this new environment, countries in Central America or Chile have the most to gain as energy importers. The drop in crude prices will boost their overall economies and balance their books," he said.

For more information on infrastructure risk/reward scores – historically or forecasted – or on other indexes such as the country score or project score, contact Benjamin Duyck, AEM director of market intelligence (bduyck@aem.org, tel: 414-298-4154).

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