Dear readers,
Argentina's macro numbers are improving. Its factories are closing. This edition looks at what sits between those two realities — and what it means for investors with exposure to the region.
Elsewhere: Venezuela's reintegration into international financial institutions, Peru's electoral runoff, and a snapshot of the region's most significant sectoral developments.
Martin Dalençon
❐ STRATEGIC OUTLOOK
Argentina: A Tale of Two Economies
Over the past few months, some of Argentina's macroeconomic figures have looked better than they have in years. Poverty fell to 28.2% in the second half of 2025, a seven-year low. The trade balance posted a record surplus in March, with agri-export settlements up 57% year-on-year. Inflation, while stubborn, is a fraction of what it was eighteen months ago. These are positive figures for the country and the Milei government who has pledged to turn around Argentina’s economy.
Argentina’s hydrocarbons industry is a source of optimism and opportunities for the country but can it really benefit the internal economy?
However, other figures tell a different story when it comes to the internal dynamics of the Argentine economy. The monthly activity index fell 2.6% in February relative to January — the steepest monthly drop since late 2023 — and contracted 2.1% year-on-year. Manufacturing output fell 8.7% while consumer confidence recorded its third consecutive monthly decline in April, dropping more than 10% year-on-year. Supermarket sales and shopping mall revenues are down. SanCor, a dairy cooperative founded in 1938 that survived hyperinflation, convertibility, and the 2001 default, filed for bankruptcy in April with liabilities of approximately US$120 million and debts owed to over 1,500 creditors.
These are not contradictory signals. They are two sides of the same structural reality.
The Missing Link
The Milei administration's economic model is explicit in its design: anchor the peso, compress domestic demand, and let competitive sectors (agriculture, energy, mining) generate the foreign currency the economy needs. The logic is not without merit. Argentina has genuine comparative advantages in all three sectors, and the export results this year reflect that.
The problem is what happens next: export revenues do not automatically translate into domestic economic activity. For that to occur, there needs to be a transmission mechanism — through wages, local supply chains, consumer spending, or public investment — that converts external earnings into internal demand.
That mechanism is currently absent, or too weak to offset the compression elsewhere. As economist Diego Dequino noted recently, the one sector that has historically managed this transmission is agriculture, which over 150 years built the institutional, geographic and economic networks that connect commodity earnings to local communities. Energy and mining, by contrast, are capital-intensive, enclave-oriented, and generate limited downstream employment.
In the meantime, the domestic-facing economy is absorbing the full weight of the adjustment. The textile sector is operating at around 37% of installed capacity; 333 textile companies closed between December 2023 and August 2025, eliminating 14,000 jobs. FATE, an 86-year-old Argentine tyre manufacturer that once exported to Europe and the United States, shut its San Fernando plant in February 2026 with the loss of 920 jobs. The proximate cause was a tariff cut on imported tyres from 35% to 16%, which allowed Chinese imports — now accounting for roughly 60% of the market — to undercut local production. Whirlpool closed its Pilar plant shortly before.
These are not isolated events. They are symptoms of the same structural shift happening in Argentina: import liberalisation combined with compressed domestic demand is eroding productive capacity at a pace that policymakers have not yet publicly acknowledged. Some of this rationalisation was probably inevitable. In the case of Whirlpool, the US company had plans to consolidate its manufacturing activity in Brazil. The liberalisation of imports in Argentina certainly accelerated this decision. The question is whether the pace of this structural shift allows for orderly adjustment or risks permanently damaging the national industrial base.
The Investment Calculus
For investors, the bifurcation creates a clear framework, if not a comfortable one. Argentina remains investable but selectively so. Sovereign debt has benefited from the improvement in the fiscal and external accounts. The RIGI (Large Investment Incentive Regime) has attracted genuine interest in energy and mining, offering long-term legal guarantees that are, for now, credible. Agri-export-linked assets continue to perform. Vaca Muerta's energy surplus is projected to exceed US$10 billion for 2026.
Exposure to the domestic economy is a different proposition. Retail, consumer goods, domestic manufacturing — these sectors face a double bind: weakened purchasing power and intensified import competition. The consumer confidence index suggests this is not a temporary hesitation. It is an entrenched caution driven by real wage erosion (public sector wages are approximately 30% below 2017-2018 levels in real terms) and by the uncertainty that prevents households from mobilising savings into consumption or investment.
🔎 What to watch
The critical variable is whether — and how quickly — the external surplus begins to generate internal multiplier effects. An upcoming test will be the evolution of informal wages, which had been recovering faster than formal wages through 2024 but appear to have plateaued in mid-2025. A second indicator is industrial capacity utilisation: if it remains below 55% through mid-2026, the hysteresis risk becomes harder to dismiss.
Argentina's external position has been genuinely repaired. Whether that repair reaches the domestic economy before the political patience runs out remains the central open question.
❐ POLICY & MACRO WATCH
Chile: Budget office warns Kast's economic plan may strain fiscal revenue
While President Kast promises to close the deficit in four years through tax cuts and deregulation, a financial report suggests a negative net impact on revenue for five years. The plan depends heavily on $6 billion in spending cuts to balance the budget as copper production hits a 9-year low. (Bloomberg Línea)Brazil: Crackdown on prediction markets and "bet-like" financial products
The Finance Ministry has blocked 27 prediction platforms, including Polymarket and Kalshi, arguing they violate federal betting regulations. New rules restrict derivatives trading exclusively to economic and financial benchmarks, effectively banning instruments tied to political, social, or sports outcomes to curb rising household indebtedness. (Reuters)
Peru: Election runoff date confirmed for June 7 amid legal investigations
The National Jury of Elections rejected calls for a re-vote in Lima, proceeding with a runoff between Keiko Fujimori and her closest rival, which appears to be leftist candidate Roberto Sanchez. Simultaneously, police raided the home of the former electoral head as part of a probe into alleged collusion and logistical failures. (France 24)Venezuela: IMF and World Bank resume formal relations with Caracas
The administration of Delcy Rodríguez has regained international financial recognition, removing a major barrier to sovereign investment. Sanctions relief on the Central Bank and major energy deals with Chevron and Repsol are accelerating a period of rapid economic normalization. (Latinsight)Regional: Mercosur to debate Venezuela’s reincorporation to the bloc
Vice President Alckmin of Brazil indicated that Venezuela's "new political moment" warrants a review of its 2017 suspension. Re-entry would require consensus and evaluation of democratic standards as the bloc reconfigures its trade strategy with the EU. (Bloomberg)
❐ MARKET INTELLIGENCE
❍ AGRIBUSINESS & FOOD SYSTEMS
Chile: Cherry industry enters “value over volume” adjustment phase
Chile is shifting its strategy from rapid expansion to capturing higher value through consistent quality and logistical coordination. Five priorities have been defined — including quality standards and market diversification — to sustain leadership in a more demanding and digital Chinese market. (Portalfruticola)Ecuador: Producers call for new Biofuels Law to drive growth
Industry leaders are urging the National Assembly to create a modern regulatory framework for biofuels like biodiesel. The goal is to substitute costly fuel imports, generate rural employment, and provide investment certainty for sustainable energy production. (El Universo)Bolivia: Organic cacao farmers block gold mining in biodiversity hubs
Communities in Palos Blancos and Alto Beni successfully passed local laws to ban mining, protecting their “purple gold” (cacao) and organic certifications. These local victories serve as a model for other municipalities resisting the environmental destruction fueled by record global gold prices. (The Guardian)
❍ MINING & CRITICAL MINERALS
Chile: Government prioritizes operational performance for Codelco
The new administration is focusing on stabilizing production and improving management at state-owned Codelco rather than pursuing privatization. Key goals include realistic project timelines and reducing a debt load that reached $25 billion while maintaining constitutional control over core assets. (Yahoo Finance)Chile: Codelco submits $97M environmental studies for lithium expansion
The state miner is advancing two projects to secure the electrical supply for Salar de Atacama and launch exploration in Salar de Pedernales. These initiatives are essential for reaching a production target of 300,000 tons of lithium carbonate equivalent by 2030. (BNamericas)Regional: "Trident" of Brazil, Argentina, and Guyana to lead oil growth
Production growth in these three nations is set to reach 10 million barrels daily by 2027, positioning them as key alternative suppliers during global energy shocks. While Brazil remains the primary driver, Guyana is showing the fastest relative expansion, tripling its current output. (Bloomberg Línea)
❍ ENERGY & SUSTAINABILITY
Brazil: Energy storage capacity projected to reach 7 GW by 2035
Projections indicate that Brazil could integrate 7 GW of battery storage to ensure grid flexibility and energy security during the energy transition. Stakeholders highlight that a stable regulatory framework is essential to lower costs and unlock the necessary private investment. (ESS)Venezuela and Colombia: Presidents advance gas and electricity integration
Delcy Rodríguez and Gustavo Petro met to discuss transporting Venezuelan gas to Colombia and re-establishing cross-border electrical interconnections. Technical teams are working to restore infrastructure in border regions that have suffered from years of disinvestment and sanctions. (EFE)
❍ MANUFACTURE & INDUSTRY
Mexico: Chinese steel imports threaten long-term industrial sovereignty
Excess Chinese steel capacity is flooding the Mexican market, undercutting local prices and threatening manufacturing jobs. Experts warn that traditional tariffs are insufficient and call for stronger regulatory barriers and the rebuilding of local supply chains. (Fastmarkets)Chile: Fuel price hikes drive 148% surge in electric and hybrid vehicle sales
Zero and low-emission vehicle sales reached record highs in March as consumers seek relief from traditional fuel prices which rose over 30%. Tesla and BYD lead the plug-in market, while hybrids now represent over 11% of total light vehicle sales. (Emol)Colombia: Ecopetrol launches regional-leading 1,000-ton daily sulfur plant
A new facility in the Cartagena Refinery converts liquid sulfur into pellets, allowing Ecopetrol to meet 70% of national demand. The project opens new export lines for the agricultural, pharmaceutical, and chemical sectors while meeting international environmental standards. (La República)
❍ INFRASTRUCTURE, TRANSPORT & LOGISTICS
Panama: Hormuz Strait blockade boosts Canal traffic and revenue
Daily transits increased to an average of 37 vessels in March as Asian refineries redirected fuel purchases toward the United States. While generating a significant revenue boost, authorities warn that exceeding 40 daily transits is not sustainable for the Canal’s long-term operations. (La Tribune)Regional: Aviation strategy shifts focus to secondary cities beyond capitals
Ministers from Honduras, El Salvador, and Chile are prioritizing air connectivity for secondary cities to drive tourism and regional integration beyond national capitals. Key successes include a 22% surge in passengers to Roatán and El Salvador’s consolidation as a regional aircraft maintenance hub through Aeroman and over 20 open skies agreements. (Informe Aereo)
❍ DEFENSE & SECURITY
Mexico: Government reactivates $500M+ military re-equipment program
After a seven-year hiatus, Mexico is investing over €502 million in seven new Yucatán-class ocean patrol vessels and 1,200 tactical vehicles to replace its aging Humvee fleet. The Air Force is also modernizing with C-130J Super Hercules aircraft, new helicopters, and strategic-range UAVs to enhance operations against organized crime. (Defensa)
❍ HEALTH & LIFE SCIENCES
Colombia: Hospital Internacional de Colombia hits robotic surgery milestone
The HIC performed the country’s first surgery using the Mantra 3 robotic system, marking a new era for high-complexity medicine in Santander. The technology improves precision and recovery times in digestive and urological procedures, aiming for international leadership by 2030. (Revista Semana)Mexico: Government implements phased rollout for universal healthcare
President Sheinbaum has launched a national service to provide all citizens with portable access to any public institution by 2028. The plan includes a new health ID card and is designed to harmonize quality across current fragmented social security networks. (Jacobin)
❍ TECHNOLOGY & INNOVATION
Regional: T-MEC review to prioritize automotive and electronic value chains
The upcoming treaty revision will focus on strengthening rules of origin and securing supply chains for high-tech manufacturing. Mexico and the US are also set to coordinate on critical minerals essential for the development of the regional electromobility ecosystem. (Mexico Industry)
❍ FINANCE & BANKING
Brazil: Nubank announces massive BRL 45 billion investment for 2026
The digital bank plans to expand its AI credit models and physical infrastructure to serve its 113 million Brazilian customers. As it nears 13 years of operations, Nubank is also moving forward with its full banking license and has joined the Febraban lobby. (MarketScreener)Uruguay: BTG Pactual targets growth in "The Singapore of Latin America"
Following its acquisition of HSBC Uruguay, the group expects to be fully operational by mid-2026, viewing the country as a primary regional investment hub. Executives highlight Uruguay's institutional stability and tax efficiency as key draws for capital from neighboring Brazil and Argentina. (El País Uruguay)
❍ TRADE & INVESTMENT POLICY
Costa Rica: Goods exports grow 8% in Q1 driven by tech and agriculture
Total exports reached $5.5 billion, with significant jumps in fresh watermelons (+26%) and electronic components (+33%). Diversification is increasing, as Asian markets saw a 53% relative growth in demand for Costa Rican products. (Revista E&N)Colombia: Foreign Direct Investment reaches 5-year low in Q1 2026
FDI fell 10% in the first quarter, reflecting investor caution amid fiscal deficit concerns and political polarization. The extractive sector remains dominant, accounting for nearly 79% of the $2.1 billion in total capital inflows during this period. (Colombia One)
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