Brazil is South America’s most influential country and one of the 10-largest economies in the world due to a prosperous and enormous potential for growth. According to the IMF its GDP was US$ 1.8 trillion in 2016, with an average GDP growth rate of 2.6% since 2000.
In office since August 2016 President Michele Temer has revolutionised policies and introduced reforms that reduce obstacles to foreign investment and reinforces Brazil’s industrial sector. The government has harnessed inflation, promoted businesses and created jobs. Welfare programs (such as the Bolsa Família) have successfully assisted millions of poverty stricken Brazilians, allowing its middle class to flourish.
The country continues to be among the top recipients of FDI (Foreign Direct Investment), attracting international businesses due to opportunities sustained by the domestic investor protection rules. In 2009 it became a net creditor of the IMF and has accumulated internal reserves of US$30 billion (March 2017). It is a founding member of Mercosur and borders with 10 countries.
The government encourages competition in the economy through modernization of its infrastructure with concessions, private financing (PPPs) and the participation of banks and investment funds. Indeed, investment in infrastructure has tripled in the past few years and a PPP package with 34 assets (port terminals, railroads, power plants, mining areas, water and sanitation services, to name a few) are to be auctioned by 2018. (In March 2017 four major airports were auctioned for US$1.18 billion.)
Brazil’s natural resources are vast: large iron and manganese reserves are important mining products and profitable exports. Deposits of nickel, tin, chromite, uranium, bauxite, beryllium, copper, lead, tungsten, zinc, gold, and other minerals are also exploited. Brazil is also a major producer and exporter of agricultural products. In a 2015 study Food and Agriculture Organisation (FAO) found it to be the second highest exporter of food, the result of scientific and technological development in modernising farming methods and agricultural machinery and equipment. As the third-largest manufacturing sector in the Americas, Brazil hosts many multinational manufacturers in aerospace, automotive, capital goods, chemicals, construction, electronics, engineering, information and communications technologies, life sciences, oil and gas.
Brazil is one of the major international energy players in the world. In 2006-2007 it became self sufficient in oil. It has one of largest petroleum reserves; in 2006 the ultra-deepwater oil (pre-salt oil) find of tens of billions of barrels of oil in fields far off the Rio de Janeiro coast was the biggest oil discovery made in the Western Hemisphere in the past 30 years. The country is also one of the main producers and exporters globally of ethanol biofuel.
According to the International Energy Agency (IEA) it is the eighth-largest producer of electricity in the world. The country is deeply committed to renewable energy (hydroelectric, wind, biomass and solar energy) which is responsible for over 76% of its matrix. Hydroelectric power is Brazil’s most important and significant source in the grid. The world’s biggest power plant in the world is the Itaipu Dam which produces 103 billion kWhs/year. Hydropower capacity is expected to increase by about 4,000 MW in 2017. It has two nuclear reactors (generating 3% of its electricity) and a third one under construction. The government plans to build 19 more nuclear plants by the year 2020.
Nestled snugly in the north-east corner of the African continent, 94% of Egypt’s land is made up of desert. Its major cities, as well as its agricultural and economic activity are concentrated along the extremely fertile banks of the Nile and the river’s delta.
Recently Egypt has introduced a major economic reform programme to improve Egypt’s public finances, these include: the liberalisation of the exchange rate regime, fiscal consolidation measures and reforms to the business environment. The liberalisation of the exchange rate regime is key towards ensuring a competitive economy and the boosting of private sector activity. Between September and November 2016 the government launched the value-added tax law (VAT), a free-floating currency, and implemented fuel and electricity subsidy cuts. This ambitious economic programme has been incredibly successful. The IMF approved a $12 billion, three-year loan for Egypt and released the first $2.75 billion tranche and in July 2017 disbursed the second tranche worth US$1.2 billion. The Fund has praised Egypt’s economic progress, its recently approved investment and industrial licensing laws, as well as a new insolvency law currently in parliament. The World Bank, China and others have also provided funds that have assisted in financing this programme.
The Central Bank of Egypt (CBE) is committed to a price stability mandate and with this in mind on the 3rd November 2016 they adopted a flexible exchange rate regime securing external competitiveness and foreign exchange reserves while supporting exports and tourism and attracting foreign investment.
Egypt is a very appealing Middle Eastern market for FDI, with investors mainly from Europe, the United States and Arab countries (The UK is the largest investor in Egypt). FDI is concentrated in the oil sector followed by construction, manufacturing, real estate and financial services sectors.
According to a report by the United Nations Conference (UNCTAD) it ranks fourth as recipient of foreign direct investment (FDI) in the African continent – following Angola, Nigeria and South Africa. The energetic growth of the Egyptian economy, its strategic geographical position, low labour costs, skilled workforce, unparalleled tourist a ppeal, its considerable energy reserves, large domestic market and the success of the reforms undertaken by the authorities (including many privatisations) all ensured a very definite increase in FDI. In 2015 there was an emphatic improvement with +49% FDI influx (particularly orientated towards the banking and telecommunications sector). According to the UNCTAD in 2016 Egypt was subject to solid FDI inflow due to the hydrocarbon sector, seeing its net inflow in the first three quarters of the fiscal year (2016-2017) mostly directed into the oil sector.
The economy depends heavily on agriculture, tourism and cash remittances from Egyptians working abroad, mainly in Saudi Arabia and the Gulf countries. Egypt’s foreign exchange reserves have been reinforced with US$6bn from Saudi Arabia, the UAE and Kuwait since President Abdel Fattah Saeed Hussein Khalil el-Sisi came into office since 2014. Sisi is a determined and resolute leader who encouraged Egyptians to have faith in rebuilding the economy by donating half of his own salary and personal assets to support the economy.
Mexico is a large export oriented country in a strategic position between North and South America with a very young, flourishing population and a rising middle-class. It has a trillion-dollar economy, bringing it in as 15th largest in the world and the second-largest economy in Latin America. Mexico’s current government, led by President Enrique Pena Nieto’s Institutional Revolutionary Party, has pushed for ground-breaking reforms in energy, financial, fiscal and telecommunication sectors (among others), closing tax loopholes in order to encourage competitiveness and economic growth.
The government is very positively orientated to foreign direct investment (FDI) in the vast majority of economic sectors and has consistently been one of the largest recipients of FDI among emerging markets. While the reforms have not led to the privatization of state-owned enterprises such as Pemex or the Federal Electricity Commission (CFE), they have allowed private firms to participate. The sectors that receive significant FDI are: finance, automobile industry, electronics and energy sectors.
Mexico has planned an important expansion of infrastructure that could appeal to FDI (with a focus on transportation, water, electricity, health, energy and urban development). In June 2016 Special Economic Zones (SEZs) were created to attract investment to the underdeveloped areas in the southern states of the country (such as Guerreo, Oaxaca and Chiapas). The companies setting up in these SEZs will receive various incentives, trade facilities, duty-free customs benefits, infrastructure development prerogatives and easier regulatory processes. Mexico has a strong tourism industry. The Yucatan Peninsula receives substantial foreign investment. It is the eighth most popular tourist destination and is home to more than 30 UNESCO World Heritage Sites.
A report by the IMF states that the hydrocarbon reserves will require an investment of US$40 billion annually between 2015 and 2019. In 2015 Pena Nieto approved the public auctioning of exploration and development rights to oil and gas resources. These are part of reforms that permit private investment in oil, gas and electricity sectors. In December 2016 Mexico held its fourth auction assigning 8 of 10 deep water fields. In 2017 the government is determined to allot the other fields. This has improved business confidence which consequently has assisted in investment increase.
In telecommunications, reforms were intended to improve competition and reduce concentration in the sector through the creation of a new, autonomous regulator. This regulator is empowered to order divestitures, enforce regulations, and apply targeted sanctions to companies it sees as excessively dominant in the market.
Approximately 95 percent of all foreign investment transactions in Mexico do not require government approval. Foreign investments that require government authorization and do not exceed US$ 165 million are automatically approved, unless the proposed investment is in a legally reserved sector. It has free trade agreements with 46 countries (free trade agreements make up 90% of its trade). In 2012, Mexico formed the Pacific Alliance with Peru, Colombia, and Chile.
Mexico’s monetary policy interest rate is at its highest in the last eight years and has been managed successfully by the Bank of Mexico.
Mexico main exports are: manufactured products such as automobiles (83% of total shipments) and oil and oil products (approx 13 %). Its main export partner is the United States (80%) and Canada (3%).
