Whenever you might be reading something about marketing, economy, and businesses, you have probably found the word LATAM very often. Have you ever wonder what does in really stands for? In this article we are going to help you understand the appropriate meaning of LATAM, what countries make it up, and a little bit of each country’s GDP, market size and investment opportunities.
According to Real Academia Española, whose main objective is the proper use of the Spanish language, LATAM is an acronym that has been implemented to refer to Latin America and the countries in this part of the continent that speak languages derived from Latin (Spanish, Portuguese and French). It can be written both, completely in capital letters or with an initial capital letter only, as it is an acronym that allows its pronunciation as if it were a word.
Latin America includes many countries extensively rich in culture, history, traditions, and their own characteristics in economy, politics, resources, languages, etc. Despite being countries united by a history of oppression and conquest, they are also very different.
The list of these countries is:
- Costa Rica
- El Salvador
- Guayana Francesa
- Puerto Rico
- República Dominicana
Before talking about the GDP of each country (in Spanish you will find GDP as PIB – Producto Interior Bruto), we will define what it is and what it measures. The gross domestic product (GDP) is an economic indicator that reflects the monetary value of all final goods and services produced by a territory in a given period of time. It is used to measure the wealth generated by a country. That is, from the production of resources, products, machines and all the goods that have been produced in the country to the services of an Uber, a doctor, a bank or a teacher, among many others.
The greater the GDP of a country, the greater its economic capacity and therefore, the greater its capacity to generate employment and investment. GDP is usually calculated quarterly. Although the GDP data that is usually used to measure the size of an economy is the annual GDP, that is, everything produced in that territory during a year. When the GDP of a country increases, it is a good sign for the economy and it affects practically all the people in the territory. On the contrary when it falls, it is a bad sign. We could compare it to the income of a family, if revenues increase it is usually a good sign. On the other hand, if incomes are reduced it is a bad sign of the economy.
According to Statista, which tracks the GDP of each country, the top 5 largest economies in Latin America and the Caribbean are Brazil, Mexico, Argentina, Chile and Colombia.
Brazil and Mexico top the list, based on gross domestic product (GDP) in 2021. In that year, the amount of goods and services produced in Brazil reached an estimated value of 1.60 trillion USD. Meanwhile, Mexico’s GDP amounted to 1.29 billion dollars. Argentina in third place had a GDP of around 488.6 billion USD, above Chile with a GDP of 316.86 million USD, followed by Colombia with 314.27 million USD. You can graphically observe the GDP by country in the following image, which is registered in billions of USD.
Brazil’s gross domestic product in 2021 was close to 1.6 trillion USD. In the second half of the last decade, the Brazilian economy failed to reach the GDP levels registered between 2010 and 2015, a period in which the total goods and services produced in the country exceeded 2.2 billion USD. In 2020, with the COVID-19 pandemic, the GDP registered its lowest level of the study period with 1.45 trillion USD.
Mexico’s gross domestic product in 2021 amounted to approximately 1,322 billion USD, and is estimated to reach 1,646 billion USD in 2027.
Argentina’s GDP declined continuously between the second quarter of 2019 and the second quarter of 2020. In 2020, the impact of the COVID-19 pandemic increased the crisis in Argentine economic growth. From April to June 2020, the total value of goods and services produced in Argentina fell to 5.000 millions of USD, the lowest value recorded. However, during the second quarter of 2021 there was a significant increase and the highest figure since the second quarter of 2019.
According to the latest estimates from the Statista Digital Market Outlook, the Latin American eCommerce market will reach a retail sales value of 80.5 billion USD this year. By 2025, this figure is projected to exceed 105.5 billion USD. Both values continue to grow year after year, and increase their participation in national economies. Although the reign of Brazil and Mexico in regional eCommerce will remain intact in the coming years, other economies such as Argentina, Chile and Peru are expected to experience much faster growth.
Argentina, which is the third market in the region based on sales value, will register the highest growth rate among the six main countries with an expected increase of 59% between 2021 and 2025. Mexico, where more than 17.300 million USD for online sales in 2021, obtains the lowest growth rate until 2025 among the six largest markets, with 11%
In 2020, the year in which COVID-19 was detected in Latin America, the percentage of the population that bought online exceeded 50% while in 2021, Brazil, Chile and Mexico exceeded 65% adoption of this form of purchase.
It is visible that the Latin American economies are constantly growing, especially in terms of electronic commerce by simplifying the purchase process and by having more options for products, services and various companies registered in this business model. Likewise, there are several factors that make investing in LATAM attractive, such as:
- The geographical position because it not only responds to the privileged physical position and the ease of exchange between some countries and others, but also the access to materials and natural resources available in the area
- Demographic development with a population of more than 667 million inhabitants
- The good international reputation because since the 90s they have managed to be considered as emerging countries
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