At the end of July this year, Paraguay joined the exclusive group of South American countries with an investment-grade rating after Moody’s assigned the country a credit rating of Baa3 with a stable outlook. With this inclusion, Paraguay becomes the fifth country in the region to achieve this level, alongside Chile, Peru, Uruguay, and Colombia.

Obtaining “investment grade” improves international perception of the Paraguayan economy and will significantly boost foreign investment in South America in the coming years. Additionally, this rating helps maintain solid and sustained economic growth.

CHILE

The results of the countries in the region with investment-grade ratings reinforce the importance of this category. A standout example is Chile, which, since achieving this rating in the early 1990s, has attracted more than USD 307.2 billion in foreign investment in South America, according to data from the Economic Commission for Latin America and the Caribbean (ECLAC).

Breaking down the figures, between 1991 and 1995, Chile accumulated USD 1.667 billion in foreign investments, which increased to USD 5.667 billion between 1996 and 2000. Later, between 2003 and 2007, investments totaled more than USD 39 billion, with an annual average of USD 7.8 million.

The period from 2008 to 2012 marked a notable increase, reaching USD 105 billion, with an average of USD 21 billion per year. Between 2013 and 2017, the figure moderated to USD 85 billion, representing an annual average of USD 17 billion.

Finally, between 2018 and 2022, investments totaled USD 55 billion. It is worth noting that in 2023 alone, Chile attracted more than USD 21 billion in foreign investment in South America in a single year.

On the other hand, it is worth mentioning that in June 2024, Moody’s decided to maintain Chile’s rating at A2 with a stable outlook, supported by the country’s institutional strength, governance, and solid fiscal position. For its part, S&P assigned Chile a rating of A with a negative outlook, while Fitch maintained a rating of A- with a stable outlook.

PERU

Peru, for its part, achieved investment-grade status in 2008. Since then, in more than 15 years, the country has received over USD 82 billion in foreign investment in South America, according to ECLAC.

Breaking down the figures, between 2008 and 2012, Peru accumulated more than USD 43 billion in investments, with an annual average of USD 8 billion. Between 2013 and 2017, investments totaled more than USD 35 billion, which equates to an annual average of USD 7.1 million.

Between 2018 and 2022, foreign investment reached approximately USD 34 billion, with an annual average of USD 6.8 million. Finally, in 2023, Peru attracted more than USD 3.9 billion in a single year.

Regarding Peru’s current rating, in April 2024, S&P downgraded its sovereign rating from BBB to BBB-, maintaining a stable outlook. This decision was motivated by the growing political uncertainty in the country, marked by the tense relationship between the executive and legislative branches.

For its part, Moody’s maintains Peru’s rating at Baa1, while Fitch rates it at BBB, both with negative outlooks.

COLOMBIA

Colombia regained its investment-grade rating in 2011, and since then, in more than 12 years, it has accumulated over USD 178 billion in foreign investment in South America.

Breaking down the figures, between 2011 and 2015, Colombia attracted more than USD 73.79 billion in investments, with an annual average of USD 14.758 billion. Between 2016 and 2020, foreign investment revenues totaled more than USD 61.633 billion, representing an annual average of USD 12.3 billion.

ECLAC data shows that in the last three years, from 2021 to 2023, foreign investments in Colombia reached USD 43.8 billion, with an average of USD 14 billion per year.

Colombia has a rating of Baa2 with a stable outlook from Moody’s. S&P, for its part, assigned it a rating of BB+ with a negative outlook, while Fitch rated the country at BB+ with a stable outlook.

It is worth recalling that in January 2024, S&P changed the outlook from stable to negative, maintaining the rating at BB+ due to moderate economic growth expectations.

URUGUAY

Uruguay regained its investment-grade rating in 2012, and since then, in more than 12 years, it has attracted over USD 31.5 billion in foreign investment in South America.

Breaking down the figures, between 2012 and 2016, Uruguay accumulated more than USD 13.619 billion in investments, with an annual average of USD 2.7 billion. Between 2017 and 2021, foreign investments totaled more than USD 9.8 billion, which equates to an annual average of USD 1.96 billion.

In the last two years, from 2022 to 2023, foreign investments in Uruguay totaled USD 8 billion, although a decline was recorded last year, according to ECLAC data.

On the other hand, Uruguay has a rating of Baa1, which is a stable outlook from Moody’s. S&P, for its part, assigned it a rating of BB+ with a stable outlook, while Fitch rated the country at BBB with a stable outlook.

It is worth mentioning that in December 2023, the rating agency Moody’s confirmed Uruguay’s rating at Baa2, improving the outlook from stable to positive. However, in March 2024, Moody’s decided to upgrade the rating from Baa2 to Baa1, changing the outlook to stable. This decision was due to solid institutions supporting the implementation of structural reforms and the continued adherence to fiscal and monetary policies, pointing to higher sustained growth rates than in previous periods.

Thus, Paraguay’s now-investment-grade rating opens up a great opportunity to attract more foreign investments, as seen in countries like Chile, Peru, Colombia, and Uruguay.

Maintaining this rating can drive the country’s economic growth and strengthen international confidence. This improves Paraguay’s image in global markets and places it in a favorable position to receive investments that will help achieve more robust economic development in the coming years.

Paraguay’s achievement of an investment-grade rating marks a significant milestone in the nation’s economic journey, positioning it alongside regional peers such as Chile, Peru, Colombia, and Uruguay. The experiences of these countries demonstrate that maintaining such a rating can catalyze substantial foreign investment in South America, fostering long-term economic growth and stability. For Paraguay, this newfound status presents an opportunity to attract capital inflows that could bolster infrastructure, create jobs, and drive innovation, further solidifying its economic foundation. However, sustaining this rating will require a continued commitment to sound fiscal policies, political stability, and institutional reforms. By learning from the successes and challenges of its neighbors, Paraguay can leverage this moment to ensure a prosperous future, enhancing its role in the global economy and improving the lives of its citizens.

According to Costa Rica’s Ministry of Foreign Trade data, the agreement with the South American nation will provide access to a market of over 17 million potential consumers. Costa Rica’s Minister of Foreign Trade, Manuel Tovar Rivera, confirmed that the FTA between Costa Rica and Ecuador will be effective on October 1. Tovar stated in the Costa Rican Congress that he would travel to Quito, the Ecuadorian capital, at the beginning of September to exchange the ratification instruments with the authorities of that country. The Legislative Assembly approved this trade agreement on May 30 with a vote of 45 Congress members. The Executive Power signed it on June 19.

While some agricultural products, such as bananas and pineapples, dairy products, beef, pork, and chicken, were excluded from the agreement, the Costa Rican Chamber of Exporters (Cadexco) estimates that the FTA between Costa Rica and Ecuador could significantly boost Ecuador’s exports by US$35 million annually. This potential growth is a promising sign for the future of trade between the two nations.

The FTA between Costa Rica and Ecuador is not just a trade agreement but a significant milestone for the Costa Rican market. It opens up new opportunities and a larger consumer base, marking a new era of economic growth and prosperity.

In 2023, trade in goods with Ecuador reached US$110 million, of which 70% corresponded to exports and 30% to imports. Costa Rica’s main product exports to Ecuador are pharmaceuticals, which accounted for US$8.23 million between January and October 2021. Iron and steel scrap and electrical materials follow this.

Current Trade Landscape

The current trade relationship between Costa Rica and Ecuador is dynamic and evolving, reflecting the broader trends of regional integration and economic diversification in Latin America. While the total value of trade between the two countries is relatively modest compared to their trade with more significant partners, it has shown steady growth over the years. This growth is underpinned by a shared interest in enhancing economic cooperation and taking advantage of complementary industries, a testament to the strength of the trade relationship. The latest available data shows that the total trade value between Costa Rica and Ecuador hovers around $250 million annually. This figure includes imports and exports, with a slight trade surplus generally favoring Ecuador. Despite its size, this trade relationship is vital for both countries as they seek to diversify their trade partners and reduce dependence on traditional markets such as the United States and Europe.

Key Goods Exchanged

The FTA between Costa Rica and Ecuador facilitates the exchange of a mix of agricultural products, manufactured goods, and services, reflecting the diverse economies of both nations. Exports from Costa Rica to Ecuador primarily include medical devices, electronics, and food products. Costa Rica has developed a robust medical device manufacturing sector, making it a key exporter of such goods in the region. Additionally, Costa Rica exports coffee, sugar, and prepared foodstuffs, which are well-received in the Ecuadorian market due to their quality and competitive pricing.

Imports from Ecuador to Costa Rica are dominated by agricultural products, particularly bananas, flowers, and seafood. Ecuador is one of the world’s largest exporters of bananas, and this fruit constitutes a significant portion of its exports to Costa Rica. Shrimp and fish, particularly tuna, are key export items, taking advantage of Ecuador’s rich marine resources. Additionally, Ecuador exports manufactured goods, such as textiles and plastics, to Costa Rica.

Areas for Future Growth

While the trade relationship between Costa Rica and Ecuador is well-established, there is significant potential for growth in several key areas:

Agricultural Innovation and Biotechnology: Both countries have strong agricultural sectors and could benefit from increased collaboration in agricultural technology and biotechnology. Costa Rica’s expertise in sustainable agriculture and organic farming could complement Ecuador’s strength in traditional agriculture, leading to innovations that enhance productivity and sustainability in both countries.

Renewable Energy: With both countries committed to expanding their renewable energy sectors, there is significant potential for bilateral cooperation in this area. Costa Rica is known for its leadership in renewable energy, mainly hydroelectric, wind, and geothermal power, while Ecuador has considerable solar and wind energy potential. Joint ventures, technology exchanges, and investment in renewable energy infrastructure could be fruitful areas for future collaboration.

Tourism: Tourism is a critical sector for both economies, and there is potential for joint marketing initiatives, tourism infrastructure development, and eco-tourism projects that could benefit both countries. Leveraging Costa Rica’s reputation as a global leader in eco-tourism and Ecuador’s unique attractions, such as the Galápagos Islands, could help boost visitor numbers and revenues in both nations.

Digital Economy and Services: Expanding digital trade and services represents another area with significant potential. Both countries are working to develop their digital economies, and increased collaboration in areas such as e-commerce, digital payments, and IT services could create new opportunities for businesses and consumers alike.

In conclusion, the FTA between Costa Rica and Ecuador marks a significant milestone in the economic relationship between the two nations, opening doors to new opportunities and reinforcing their commitment to regional integration. As they prepare to implement this agreement, both countries stand to benefit from enhanced trade, diversified economic partnerships, and collaboration in critical sectors such as agriculture, renewable energy, tourism, and the digital economy. By capitalizing on their complementary strengths and shared vision for sustainable development, Costa Rica and Ecuador can build a stronger, more resilient bilateral relationship that will contribute to their long-term economic prosperity and regional influence.

A developed Chancay Port in Peru will enable better utilization of the new reconfiguration of global trade.

Jhon Valdiglesias, a researcher at the Center for Asian Studies of the National University of San Marcos, recently commented that the upcoming commencement of operations at the Chancay Port will allow Peru to integrate into major global value chains, enabling the country to better capitalize on the new reconfiguration of global trade resulting from the trade war between the United States and China.

“Having the Chancay Port will open up more opportunities for us to integrate into global value chains, thereby ensuring better utilization of the free trade agreements that Peru has signed,” he told Agencia Andina.

He highlighted that this new port terminal would promote the creation of industrial and technological cities and new infrastructure, such as access roads, enabling the production of goods or parts of final products traded globally.

For example, in the case of reduced exports from China to the United States (as a result of the trade war), Valdiglesias mentioned that the economies that are well integrated into global value chains and export manufactured products will replace these shipments.

The economist will speak this Thursday on the panel “Trade and Investment for Inclusive and Interconnected Growth” as part of the preparatory meetings for the Asia-Pacific Economic Cooperation (APEC) Leaders’ Summit.

Exporting Manufactures

“With global value chains, it is easier to export manufactured products because there is no need for the final product, only one of the inputs. This is a great opportunity for less developed countries to take advantage of,” he emphasized.

He mentioned that the countries most benefited from this new reconfiguration of global trade have been primarily Mexico, Vietnam, and Taiwan due to their strong integration into global value chains.

“In the specific case of Mexico, one of its great advantages is its location, as it is close to the United States, which has facilitated the flow of many American investments into that country,” he explained.

Additionally, they receive investments from Asian countries to construct plants to sell to the United States, taking advantage of their proximity.

More Opportunities

He commented that Peru must be more aware of this new reality to capitalize on it better. “So far, very little has been achieved because Peru is primarily a raw material exporting country,” he noted.

In this regard, he reiterated that countries like Mexico, Vietnam, Taiwan, and Canada are better integrated into global value chains, which opens up more opportunities to take advantage of the new international trade scenario.

“If a country is part of the global value chain, it exports a high-value-added input or a technology-intensive product to produce a final product,” he explained.

Technology Transfer

He emphasized that being part of the Asia-Pacific Economic Cooperation (APEC) allows us to continue advancing by incorporating best practices for manufacturing development.

“Being in APEC allows us to continue expanding research and keep the debate going to advance the economy as a whole,” he said.

“Technology is the only way to advance in international trade and economic growth. While it is important to encourage foreign investment, it is also crucial to promote the transfer of new technologies,” he stressed.

In this regard, he mentioned China’s experience, a country that negotiated with international companies that wanted to establish themselves in its Special Economic Zones and ensured technology transfer.

“Without technology, there are no global value chains, and there is no sustained high growth to overcome the issues we know, such as poverty, inequality, insecurity, among others,” he emphasized.

Chinese role in the development of the Chancay Port

China has played a pivotal role in developing the Chancay Port. This critical infrastructure project marks a significant step in Peru’s efforts to become a major player in global trade. The port, located just north of Lima, is a joint venture between the Chinese state-owned company COSCO Shipping and the Peruvian company Volcan Compañía Minera. China’s involvement is financial and strategic, as the port is part of China’s broader Belt and Road Initiative (BRI), which seeks to enhance global connectivity through infrastructure investments. By investing in the Chancay Port, China is establishing a crucial logistics hub on the Pacific coast of South America, facilitating trade between Asia and Latin America. This investment aligns with China’s goals of expanding its regional influence and securing industry supply chains. For Peru, the partnership with China offers access to significant capital, advanced technology, and expertise in large-scale port operations. The development of the Chancay Port under China’s guidance is expected to transform Peru into a critical node in global value chains, boosting its export capacity and economic growth while strengthening bilateral relations between the two nations.

The development of the Chancay Port represents a critical milestone in Peru’s economic evolution, serving as a gateway for the country to fully integrate into global value chains and diversify its economic activities beyond raw material exports. By facilitating the production and export of higher value-added goods, the port will enable Peru to tap into new opportunities within the reconfigured global trade landscape, particularly in the wake of shifting dynamics between significant economies like the United States and China. Moreover, this project will enhance Peru’s competitiveness and attract foreign investment, promote technological advancement, and catalyze the growth of industrial and technological hubs across the country. In essence, the Chancay Port is poised to be a pivotal infrastructure asset that will drive inclusive and sustainable economic growth, helping Peru to achieve a more prominent role in the international market while addressing domestic challenges such as poverty, inequality, and economic security.

The president of the French automaker highlighted the importance of expanding the Incentive Regime for Large Investments in Argentina (RIGI). Renault has chosen San Juan province in Argentina as the setting for launching the new Kardian, an SUV representing a significant brand transformation. This model introduces a new platform, engine, technology, and design, beginnin a series of global launches until 2027.

Renault’s Commitment to Electromobility in Argentina

Pablo Sibilla, president of Renault, took the opportunity to discuss the brand’s expectations and the impact of the Incentive Regime for Large Investments in Argentina (RIGI) on the Argentine automotive industry. Sibilla emphasized that the new Kardian platform allows “any vehicle built on that platform to be hybrid.” This technological advancement paves the way for increased production of electric and hybrid vehicles in Argentina. This is an essential step for the country in its goal to remain competitive in an increasingly electromobility-focused global market.

https://www.youtube.com/watch?v=ux2UAWOJgvEg

Expanding RIGI for the Future of Electromobility

In this context, Sibilla underscored the urgent need to expand the Incentive Regime for Large Investments in Argentina to promote electromobility in Argentina. Currently, the regime needs to fully address the sector’s needs, limiting the potential growth and development of the local automotive industry.

Sibilla revealed that Renault is in talks with Javier Milei’s government to integrate electric and hybrid vehicles into the Incentive Regime for Large Investments in Argentina, aiming to incentivize production and investment in clean technology. “Brazil launched the Mover plan, which attracted significant investments in electrification. We believe Argentina must implement similar measures to avoid falling behind in local vehicle manufacturing in 5 or 6 years,” Sibilla explained.

The Impact of “Impuesto País” and Future Tax Reforms

In addition to the update of the RIGI, the Renault president also discussed the impact of the “Impuesto País” on vehicle prices. The possibility of a 10% reduction in the tax, announced for September, might not be fully reflected in consumer prices since many dealership vehicles have already paid this tax. “If the tax decreases, the percentage will not be fully transferred to final prices,” Sibilla clarified. Despite this, he highlighted that any reduction in the tax would positively impact the sector’s competitiveness, although the effects might not be immediate.

Sibilla also emphasized that a general reduction in taxes would improve the competitiveness of the Argentine automotive industry, not only for domestic sales but also for exports. “The elimination of the 10% Impuesto País is a major change. It will affect car sales in Argentina and our export capacity,” Sibilla stated. He added that Javier Milei’s government aims to gradually reduce taxes as the economy and revenue allow, which would benefit the automotive sector.

Renault’s Future Plans and the Role of RIGI

Finally, Sibilla assured that the Kardian marks the beginning of a new era for Renault, with an investment plan extending until 2027. He also hinted that new models and the Niagara pickup truck will be announced before the end of the year. With this transition, the French automaker Renault hopes to lead the push toward greater electrification in the Argentine market, solidifying its position in the industry and responding to the growing demand for electric vehicles.

The Incentive Regime for Large Investments in Argentina: A Key Economic Driver

The Incentive Regime for Large Investments in Argentina, or RIGI, is a central initiative introduced by Javier Milei’s government in Argentina to attract substantial private investments to stimulate economic growth. This program is designed to encourage large-scale investments across various sectors by offering significant incentives to investors. Critical features of the Incentive Regime for Large Investments in Argentina include tax breaks, streamlined regulatory processes, and other financial incentives that make it more attractive for companies to commit significant capital to projects in Argentina. By setting a high minimum investment threshold, the regime ensures that only large projects with the potential to impact the economy significantly are eligible. The overarching goal of RIGI is to modernize Argentina’s infrastructure, create jobs, and drive long-term economic development, positioning the country as a more competitive destination for global investment.

The Broader Impact of RIGI on Argentina’s Automotive Industry

The resurgence of Renault’s €300 million project in Argentina underlines the pivotal role of the Incentive Regime for Large Investments in Argentina in revitalizing the nation’s automotive industry. As Renault embarks on a new era of electrification and innovation with the launch of the Kardian SUV, the company’s collaboration with Javier Milei’s government to expand RIGI demonstrates a shared vision for a competitive and sustainable future. By embracing clean technology and reducing tax burdens, Argentina is poised to attract more significant investments, enhance its industrial capabilities, and strengthen its position in the global automotive market. The success of RIGI in driving such substantial projects serves as a testament to the potential of well-crafted economic policies to catalyze growth and transform key industries.

Governor’s Promised Goals and Achievements

When he was a candidate, Diego Sinhue, the governor of Guanajuato, Mexico, promised to attract more than $5 billion in foreign investment in Guanajuato. This projection of economic growth represented a significant gain for different sectors. Guanajuato will be closing the six-year term with double the foreign investment in Guanajuato that was initially set, as announced by Diego Sinhue Rodríguez Vallejo, governor of Guanajuato. He mentioned that the goal is very close to being achieved, with the addition of other projects. He stated that his six-year term will close with over $10 billion in foreign investment in Guanajuato with investment projects. He reaffirmed his commitment to finishing his administration on a high note. He recently revealed that an event would be held to announce this news, emphasizing that it was not an easy task, but through effort and teamwork, it was achieved.

Achievement of the $10 Billion Milestone

“We are already on the verge of surpassing $10 billion. This is an important milestone because we committed to bringing in $5 billion during the campaign, which is already over $9.5 billion. We are about to double the goal; we are a month away, and I hope we can make the announcement soon. We will hold an event to announce the $10 billion in foreign investment in Guanajuato as soon as it is signed,” he said.

Economic Impact and Sector Growth

Rodríguez Vallejo explained that when he was a candidate, he promised to attract over $5 billion in foreign investment in Guanajuato, so this growth of more than $4 billion means a lot to different sectors in the state. These investments, which will be announced soon, will significantly contribute to this, doubling the goal. He assured that pending projects would fall to the elected governor, Libia Dennise García Muñoz Ledo, to follow up on.

Sector-Specific Investments

Guanajuato has attracted substantial foreign direct investment in several key economic sectors in the past six years. The automotive industry has received the largest share, accounting for 35% of the total investment, reflecting the state’s growing importance as a major player in this industry. Significant investments have flowed into the manufacturing and industrial sectors following the automotive sector, bolstering the state’s production capabilities and infrastructure. Additionally, the technology sector has seen a notable increase in foreign capital, driven by Guanajuato’s focus on innovation and digital advancement. The energy sector has also attracted considerable investment, highlighting the state’s commitment to sustainable and renewable energy projects. These diverse investments have strengthened Guanajuato’s economic foundation and set the stage for future growth and development across multiple industries.

Resilience and Future Prospects

“Many more projects are coming, and many more that we will leave to the next governor,” he stated. The state leader explained that despite having a challenging six-year term due to the pandemic, Guanajuato kept up, implementing actions to keep the economy flowing.

Commitment to Economic Growth

“Despite being a complicated term, despite the difficulties, entrepreneurs worldwide continue to trust Guanajuato because there is seriousness, public policies, citizen participation, recreation, and transparency. This makes manufacturers want to keep investing in Guanajuato,” the state governor asserted.

New Projects and Sector Highlights

He pointed out that this investment attraction is equivalent to 160 projects exclusively brought to the state by the Ministry of Sustainable Economic Development. For these projects, agreements were signed with these companies, and a commitment was made to generate jobs accompanied by investment. It is worth noting that, according to the Ministry of Sustainable Economic Development, 35 percent of these projects are in the automotive industry, highlighting the growth that Guanajuato has experienced in this sector over the years.

A Legacy of Economic Success

As Guanajuato approaches the end of Diego Sinhue Rodríguez Vallejo‘s six-year term, the state is poised to celebrate an unprecedented milestone in its economic development. The projected $10 billion in foreign investment in Guanajuato, doubling the initial campaign promise of $5 billion, underscores the remarkable progress achieved under Rodríguez Vallejo’s leadership. This substantial influx of capital reflects the state’s burgeoning significance in global economic arenas and highlights its strategic positioning across various vital sectors. The automotive industry, which has garnered the largest share of this investment, exemplifies Guanajuato’s growing stature as a critical player in manufacturing and innovation. Expanding the technology and energy sectors also signifies a well-rounded and forward-looking economic strategy. The influx of 160 new projects and the continued trust of international entrepreneurs attest to Guanajuato’s resilient and dynamic business environment. Despite the challenges posed by the pandemic, the state has managed to attract substantial foreign investment in Guanajuato through effective public policies, transparency, and an unwavering commitment to economic growth. As the term concludes and the baton is handed over to the incoming governor, Libia Dennise García Muñoz Ledo, Guanajuato stands as a testament to successful economic stewardship, ready to build on this solid foundation for future prosperity. The legacy of this record-breaking investment will undoubtedly pave the way for continued development and reinforce Guanajuato’s position as a thriving economic hub in Mexico.