One of the key drivers of this growth is the region's expanding middle class. According to the Inter-American Development Bank, Latin America's middle class is expected to account for over 60% of the population by 2025. This growing consumer base is providing a boost to the region's domestic markets, which are becoming increasingly important for multinational companies looking to tap into the growing purchasing power of Latin American consumers.
In addition to the growing domestic market, Latin America is also becoming an increasingly important destination for foreign direct investment (FDI). According to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), the region received a record high of $168 billion in FDI in 2018, a 14% increase from the previous year. This trend is expected to continue, with ECLAC projecting that FDI to the region will reach $185 billion by 2020.
The region is becoming a preferred destination for investors, due to its macroeconomic stability, and the implementation of economic reforms by many of the countries. For instance, Mexico, which is the second-largest economy in the region, has implemented a series of structural reforms over the past few years, aimed at boosting the country's competitiveness and attracting more investment. These reforms have included measures to improve the business environment, such as reducing red tape and strengthening property rights.
The investors are also attracted to the region's natural resources. Latin America is rich in natural resources, including oil, gas, and minerals, which are in high demand globally. These resources are becoming increasingly important for countries looking to diversify their economies and reduce their dependence on traditional sources of growth, such as agriculture and manufacturing.
Despite the current economic challenges, Latin America continues to be an attractive destination for emerging-market investment. With its expanding middle class, growing domestic markets, increasing FDI, and abundance of natural resources, the region is well positioned to continue to grow in the years ahead.
