Latin America benefits from economic prudence, lower inflation and the political will to lift millions of people out of poverty - which includes plans to spends billions on infrastructure.
As Brazil prepares to host the 2014 World Cup and 2016 Olympics, there is already high visibility for infrastructure projects. Both events provide welcome publicity for the infrastructure push.
Mexico has also acknowledged that its infrastructure lags that of other countries and requires improvement; in 2007, Mexico rolled out the National Infrastructure Programme (NIP). The NIP identified more than 300 infrastructure projects in multiple sectors representing over $141 billion to be financed using public-private partnerships, with significant Mexican public-sector investment.
Meanwhile, Peru – despite being resource rich and having demonstrated economic resilience in the global downturn – has a significant infrastructure quality gap.
The government’s economic stimulus plan – to offset the effects of the global financial crisis – targeted spending on public works and infrastructure public-private partnerships. With the plan largely implemented, the private sector is increasingly expected to play a leading role again. In February 2010, a massive earthquake hit central Chile. The cost of repairing and rebuilding the infrastructure and housing damaged during the earthquake is about $1.2 billion.
The involvement of private capital creates a favourable environment for prospective shareholders and should create attractive investment opportunities in Latin American infrastructure. The multiplier effect of such investment will stimulate growth and make a compelling case for investing in the region for many years to come.