 |
|
|
 Business News | February 2006 
Latin American Investors Should Focus More on Brazil's Elections
 Laura Wides-Munoz - Knight Ridder
| | ith about a dozen presidential elections set to take place in the next 15 months, the potential for some market anxiety is not surprising. |
Investors should be less concerned about upcoming presidential elections in Mexico and more concerned about elections in Brazil as they evaluate political risks in Latin America, financial experts said recently.
With about a dozen presidential elections set to take place in the next 15 months, the potential for some market anxiety is not surprising, said panelists at the Latin American Borrowers and Investors Forum in Miami. But they emphasized that the regions left-leaning candidates, and governments, should not be lumped together.
"We need to see what they are going to do, not what they say they're going to do," said former Peruvian Prime Minister and World Bank vice president, Roberto Danino, who noted that Alberto Fujimori came into power on an anti-market platform but quickly embraced the free market once he was elected.
"Initially everyone was looping the left in all together," said Susan Purcell, head of the University of Miami's Center for Hemispheric Policy. She distinguished between leftist Latin American leaders in the European socialist tradition, such as Brazilian President Luiz Inacio Lula da Silva, and the more autocratic Hugo Chavez of Venezuela.
Lula's awareness of the need to remain within the mainstream was the reason he has been able to maintain significant support, said Brazilian Treasury Secretary Joaquim Levy.
Mexico's leftist presidential candidate Andres Manuel Lopez Obrador would likely behave more like Lula, and even if he didn't, the Mexican governmental structure would ensure the country's stability, said Christian Stracke, a senior analyst and expert on emerging markets for the firm CreditSights.
"In Mexico, there is too much risk priced in," Stracke said, adding that political stability there would be as much decided by whether Lopez Obrador wins the July elections, than by the makeup of the country's Congress.
In fact, Lopez Obrador might be able to work better with the Mexican Congress than current President Vicente Fox, whom he characterized as more "hands off."
"On the flip side, there should be more concern in Brazil," Stracke said, adding that while populist candidate and former Rio de Janeiro state Gov. Anthony Garotinho was unlikely to unseat Lula in the October elections, he could generate enough support to shift the balance at the congressional level.
"Even if he doesn't win, he could be a radical voice for the left," Stracke said.
Rather than focusing on whether the new governments will move too far to the left, investors should be looking at the need to pressure Latin American countries to improve their aging and neglected infrastructure, which will help them remain competitive with China, ensure jobs and ultimately ensure stability, Danino said.
Infrastructure investment dropped from 3 percent of Peru's GDP to 0.8 percent in the last decade, Danino said.
He called on multilateral groups such as the World Bank to step up support for infrastructure projects.
"The lack of infrastructure is choking growth," Danino added. "To have income distribution, you need to have income, and to have growth you have to have infrastructure." |
| |
|
Vallarta Weddings
Tell a Friend
Site Map
Print this Page
Email Us