5 Reasons Why Latin America is a Key Market for Global Expansion in 2025

• November 21, 2024 • 0 minutes read

Latin America has always been a region full of economic potential, known for its diverse natural resources, a rich blend of coexisting cultures, and populations with an entrepreneurial spirit (which has developed greatly through learning to survive in less favorable conditions due to crises in the late 20th century). Above all, it is known for its desire for growth. This region continues to attract the attention of companies from around the world and is emerging as a key market for business expansion—something that wasn’t as common in the 80s and 90s. Given the steady growth projections for 2025, Latin America is becoming essential for any company considering global expansion.

Let’s look at 5 Reasons to Invest in Latin America:

1) Current and Expected Economic Growth, and a Rising Middle Class.

The economic forecast for Latin America in the coming years is encouraging. By 2025, the World Bank expects the region to grow by around 2.5% annually, as it has in recent years. This may seem modest, but it’s steady, and it’s driven by a growing middle class demanding new products and services. Large countries like Mexico, Colombia, Brazil, and Peru are seeing more people move into middle-income brackets, seeking quality goods, financial services, and technological benefits. Central American countries like Costa Rica are also experiencing growth due to foreign investments in specialized medical supplies, enhancing a skilled and tech-savvy middle class. With this in mind, the region becomes highly attractive for companies in consumer goods, logistics, fintech, and e-commerce.

2) From Analog to Digital: Latin America is Now Online

By 2025, around 80% of the population in Latin America's major cities will be using tools that keep them digitally connected to the world through electronic devices and smartphones, with an estimated 450 million devices in people’s hands. This is fundamental for companies, especially in sectors like e-commerce, fintech, and digital services, which value speed in service delivery. The pandemic accelerated this transformation, making it the new normal across Latin America. International companies are already deploying services and infrastructure to bring internet access to remote areas; technology giants like SpaceX’s Starlink are already available in several markets, bringing real connectivity to previously overlooked populations. Clear examples include Mexico, Brazil, and Argentina, already tech leaders, with high usage rates in mobile banking, digital payments, and social media. Here lies good growth potential for companies that can offer digital services to a market with increasing demand. A clear example is the rapid growth of specialized contact center offerings (Guatemala, El Salvador, the Dominican Republic, among others) employing skilled labor at relatively low costs and utilizing advanced technology in their daily operations.

3) New Investments in Green Energy and Sustainability

Latin America is becoming a leader in renewable energy, with nearly 90% of its energy matrix derived from natural sources. Now, the major goal is for the renewable energy sector to grow exponentially by 2025. Countries like Brazil, Chile, Costa Rica, and Colombia are making significant investments in solar, wind, and hydroelectric power, meaning companies that prioritize sustainability will find strong support in the region. For any business focused on ESG (Environmental, Social, and Governance) objectives, Latin America not only offers a market that values sustainability but also the opportunity to make a real impact. Governments recognize this eco-sustainable renewal and offer tax benefits ranging from exemption from tax rates to direct support from state institutions for investments in renewable energy. Having a partner who knows the legal benefits and can assist in completing the necessary requirements is often advantageous.

4) Favorable Business Environment

Latin America is also becoming more accessible for international trade, in many respects, in addition to being attractive in terms of numbers. With a large population close to 660 million, a single language that unifies markets, and close ties between many countries, this has been leveraged through make trade agreements to promote commerce. These include the USMCA (United States-Mexico-Canada Agreement), Mercosur, the Pacific Alliance, and FAUCA in Central America, among others.

By 2025, these agreements will continue to open trade routes and reduce barriers, making it easier for companies to import, export, and operate in the region. For example, Mexico’s manufacturing capabilities and proximity to the United States make it an ideal base for companies in sectors like electronics and automotive. The pro-trade environment throughout the region makes Latin America a smart location for both new markets and global supply chains. Countries have recognized this and are now fostering strategically located trade zones. Using the Panama Canal as a competitive advantage, hubs are being created to facilitate the reception and movement of products between markets, reducing additional costs in the supply chain.

As trade agreements simplify market entry, including trade treaties with Asian giants like South Korea and more recently with India, companies interested in the region can benefit from favorable trade policies and the still low-cost advantages Latin America offers.

5) Innovation, Human Talent, and a Growing Startup Ecosystem

Innovation is rising in Latin America. The startup ecosystem in areas like fintech, digital health, agri-tech, and logistics technology is flourishing, with support from both local governments and international investors. Countries like Costa Rica, Mexico, Colombia, Brazil, and Argentina are gaining recognition as tech hubs, where startups are creating solutions specifically designed for local needs, solving common problems with technology tailored to local market habits. Additionally, with educational and digital training programs on the rise, Latin America’s talent pool is becoming increasingly deep and tech-savvy, facilitating the recruitment of skilled human resources.

In Summary: A Region Full of Possibilities

The region is no longer seen as just a few countries with growth potential; it is now an emerging multicultural market—a key region for any global expansion plan. The growth projections for 2025 show a region on the rise, with a dynamic economy, strong consumer demand, and a commitment to sustainability. It’s a market full of possibilities for companies looking to expand their presence, reach new audiences, and build lasting connections in one of the world’s most diverse regions.

For visionary businesses and leaders, Latin America offers a unique combination of opportunity, talent, and innovation. The time to enter this market is now, and companies that do so effectively will be well-positioned for success in the medium term. Remember, your best case scenario is working with a reliable partner in all this countries who provides Market Expansion Services and focus in growth.