Latin America 2017: A region plagued by uncertainty
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Latin America 2017: A region plagued by uncertainty

Latin America has been in a constant state of uncertainty over the last few years.

2016 has seen some notable political, economic, and social events throughout the region like the Olympics in Brazil, the ongoing crisis in Venezuela, and the shock result of the Farc peace deal referendum in Colombia.

The election of Donald Trump has thrown Latin America, like many regions, into even more uncertainty. Of course Mexico’s relationship with the US is one big question mark, from walls to trade tariffs but Argentine president Mauricio Macri was the first major Latin American leader to reach out to the President-elect to open up a dialogue.

On the flipside, Peru’s economy is one of the few in LatAm that’s growing. If Trump actually makes good on a promise to invest in roads and bridges then Peru could stand to gain from its copper exports. Either way the future of Latin America’s ties with the US remains up in the air.

 

Startup deals

For the tech sector, Latin America has long been a region of great promise but also notable obstacles. Macri is trying to stimulate the Argentinian economy for startups by introducing policies that are more favourable to small and medium sized businesses and startups.

Earlier this year we saw how Puerto Rico was trying to reach out of its recession doldrums by shining a spotlight on startups. Accelerator Parallel 18 said it’s trying to extract economic value from tech start-ups and start-up culture to ensure young professionals stay on the island to work.

It was derived from the success of the Start-Up Chile program and the region has seen the model replicated a lot but tweaked here and there. Startup Buenos Aires and Start-Up Brasil are just a couple of examples.

Autumn and winter 2016 saw a flurry of investments in Latin America. The biggest deals grab the headlines like ecommerce platform Linio raising $55 million from several investors in September. However there are dozens of smaller deals, oftentimes below one million, going on beneath the surface suggesting that there’s a healthy flow of deal-making. For example, Chilean bus ticket sales platform Recorrido raised $600,000 just after summer.

Perhaps the biggest investment news for tech startups in Latin America was the recent announcement from Chinese internet giant Baidu. Sensing an opportunity, the company launched a $60 million fund solely for Brazilian startups. That a company like Baidu sees Latin America, and Brazil specifically, as a good bet for investing is a significant vote of confidence for the future despite the turmoil of recent years.

 

More customers than ever

There’s a clearly growth in this market that’s worth exploiting. The latest figures from market research firm GfK show that smartphone demand in Latin America has grown 6% year-on-year for the first time in five quarters. In Q3, growth was most prevalent in Argentina, Chile, and Peru with Brazil’s decline slowing down marginally. GfK forecasts that will grow 1% in the next year but the picture is anything but fluid across the board.

“Brazil was tearing LatAm down massively over the past quarters until mid-2016, but in Q3, this has changed,” Arndt Polifke, director of global telecom at GfK, tells IDG Connect. “The decline in Brazil was not as strong as before. Therefore the positively developing countries like Argentina, Chile and Peru were able to turn the total trend into positive in Q3.”

Argentina in particular registered 60% growth year on year in smartphone demand per Q3 figures.

“For 2017 a slightly positive result is expected, Brazil is expected to not significantly decline further and the other countries are also predicted to remain stable.” Despite the positive turnaround though and 2017 expected to be good, things may still hit a wall.

Nevertheless smartphone demand will remain strong enough to give more companies reasons to build out their mobile products in the region. The mobile taxi/ridesharing app economy, for example, is particularly vibrant in South America and Mexico and it’s mostly down to local players rather than Uber.

 

A changing landscape

Latin America’s political landscape will face a testing couple of years and that will have an effect on policy and business for the IT sector. We said something similar this time last year so if there is one certainty, it’s uncertainty. Brazil’s political transition has brought the Marco Civil internet law under the microscope and threatens some internet freedoms in the country. Colombia is in the midst of an ambitious tax reform and, according to GSMA, changes to the VAT structure could be a boon to the country’s mobile industry.

Chile and Ecuador will both have general elections next year. Argentina will host its legislative elections in late 2017, which will put Macri’s policies and approval to the test. 

All the while new sectors are being explored. VR is touted as the next big thing for Latin America and biometric security startups may be on to something with the region’s banking sector, all the while state money is betting big on solar power.

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Jonathan Keane

Jonathan Keane is a freelance journalist, living in Ireland, covering business and technology

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Mauricio on April 26 2017

And Uruguay?

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Mauricio on April 26 2017

And Uruguay?

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