Mr. Liesenfeld, Germany is Latin America’s fourth largest trading partner and the third largest investor in the region. What are the prospects for the future?
Latin America has a rather underdeveloped position in Germany’s foreign trade balance with a 2.9% share of exports and a 2.7% share of its imports. This position could be significantly developed in absolute figures, as the last ten years clearly demonstrate. German businesses are responsible for roughly 5% of GDP in Brazil and Mexico.
In 2008, before the crisis, the volume of German trade with Latin America rose by 12% to 56 billion US dollars. What are the reasons for such a powerful increase?
Since 2003 the region has been experiencing an economic boom, which was only briefly interrupted in 2009. This resulted in a 25% increase in per capita income in the period from 2003 to 2008. German exports particularly benefited from powerful domestic economic growth here. However, German imports from the region rose, too.
Latin America’s economies have been counted among the winners of globalization in recent years and have achieved enormous growth. What makes these countries so strong?
One of the reasons for Latin America’s good position is its wealth of mineral resources, energy resources and agricultural potential. Above and beyond its natural resources, the region has a generally developed industry and an expanding export sector. A growing middle class strengthens the domestic market, which is the main engine of economic development.
Brazil, for example, has managed to liberate many millions of people from poverty with continuing growth and social programmes. How are the growing middle classes changing the markets for German businesses?
Until the 1990s the traditional elites had little interest in solving basic problems like high poverty rates, crass differences in income and the exclusion from society of large sections of the population. In Brazil this changed fundamentally under President Lula da Silva. In the last six years the middle class has increased in size from 34 to 53% of the population. Due to the strong expansion of the middle class, the demand for consumer products and services is increasing at a high rate.
What does business want from politics in the future? More trade agreements with regional economic associations like Mercosur?
The rapid conclusion of an EU-Mercosur free-trade agreement would be an important measure for strengthening European companies in the region. However, if an EU agreement with Mercosur moves as far into the future as a successful conclusion of the Doha Round, the European Union will have to reconsider its strategy. EU free-trade agreements also exist with Chile and Mexico and not only with Latin American integration inititiatives.
About Bodo Liesenfeld:
Our interviewee is managing partner of Liesenfeld International GmbH and chairman of the Business Association for Latin America (LAV) in Hamburg, a network for German firms with interests in Latin America and the Caribbean.
