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Tuesday, 20 March 2018 14:56

The Pacific Alliance

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Pacific AllianceThe Pacific Alliance (PA), Alianza del Pácifico in Spanish, is one of two major trade blocks in the Latin America (LATAM), and is comprised of Chile, Colombia, Peru and México.

The GDP of the PA countries makes them the 8th largest economic power and a population of 216 M people. It represents LATAM’s 38% of GDP and 50% of trade. PA was founded in 2011 and its charter goals are: 

  • Work towards a free movement of goods, services, resources and people 
  • Promote economic and social development 
  • Become a political, economic and development platform, with emphasis on Asia/Pacific.

The group’s similar vision of development and trade have allowed them achieved solid steps on their regional integration during the alliance’s first years: 

  • Eliminated tariffs for 93% of goods trade 
  • Integrated their stock exchanges, now the largest stock exchange in LATAM 
  • Facilitated movement of persons 
  • Participated in joined promotion activities 
  • Shared embassies, like in Ghana.

The other trade group is the Common Market of the South (Mercosur) that gathers Argentina, Brazil, Uruguay and Venezuela. Mercosur was found in 1991 and its goals has been inward looking by focusing on developing a larger internal market. The PA and Mercosur block represents way over 90% of LATAM GPD. 

Despite the commodities and oil price drop, the PA countries’ prudent fiscal policies have allowed then to continue growing in 2106 to remain LATAM’s growth engines for the region. In the Mercosur, only Uruguay is expected to growth. Argentina, Brazil and Venezuela are expected to experience a year economic recession (back to back recession years for both Brazil and Venezuela). 

The growing importance of the PA block brings another element to consider when entering or expanding in LATAM. LinkIT LATAM monitors on an on-going basis the development of PA, as well as, the Mercosur, to advise our customers on the right business strategy to follow.

Read 86 times Last modified on Friday, 23 March 2018 16:27

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