The Promise of Latin American Markets
Russia accounts for approx 30% of global weapons and military equipment exports to Latin America and is interested in expanding and augment its traditional export markets of China and India.
Rostec, April 17, 2015 - LAAD, the largest aerospace and defense technology trade show in Latin America ran in Rio de Janeiro on April 14 through 17.
Russia has participated in the show for the 10th time. How are trade relations of Latin American countries with other countries progressing, what are the prospects for cooperation between Russia and Latin America, and what objectives is Rostec Corporation going to pursue in this connection?
Latin America and the World. The place and role of Latin America in the global politics and economy have been changing noticeably in recent years.
The region’s economy demonstrated healthy growth between the years 2003 and 2010 (averaging 5% annual growth). Wages were rising, unemployment was shrinking. After this, the regional economy slowed down for four consecutive years, with the slowdown affecting, among others, the two biggest economies of Latin America, Brazil and Mexico, as well as Chile, Peru and Colombia. By the year 2014, economic growth slowed down to 2% per annum in Chile and to a local historic minimum of 1.3% for the region as a whole.
Experts believe that the key reasons for this slowdown were declining demand and falling prices for commodities produced by Latin America (coal, iron, soybeans, copper, gold, and coffee), and the transition of the US to a new monetary policy which made borrowing more expensive for the region.
However, now analysts are talking once again of moderate recovery of economic growth. The IMF and the World Bank expect year-over-year growth of 2.2% in the region in 2015, accelerating to 2.7% per annum over the next five years. These optimistic forecasts stem from the region’s relatively low debt burden, strong and healthy banks, and significant international reserves.
Of all the nations in the region, Argentina, Brazil, Venezuela, Colombia, Mexico and Chile hold the greatest potential for foreign trade and cooperation with Rostec at this point. They stand out not only in their significant role in global resource exports, but also in their significant science, research and manufacturing potential.
Latin American Countries and Russia. The Russian Federation has been steadily expanding political and economic cooperation with Latin American and Caribbean counties for many years, broadening interactions with countries in the region at various international organizations, and facilitating Russian exports of R&D-intensive manufactured goods, as well as engaging in joint energy, infrastructure and high-tech projects.
A whole range of factors contribute to closer relations between Russia and Latin America. First of all, this is similarity in views on key international problems, according to political scientists. Mutual interest manifests itself through growing trade, economic and investment cooperation. Russian manufacturers, in turn, are becoming increasingly willing to enter Latin American markets.
Russia’s strengthening position in Latin American countries is only logical, leading Russian experts believe. Transition of many countries in this region to a new stage of development is one of the factors contributing to this.
Regional economies undergoing modernization are in deed of advanced technologies, high-tech products and services, which Russia can offer. At the same time, in addition to goods, Russia is also ready to provide technology solutions, moving father than Western suppliers in localization of technologies, production facilities and competencies the better to accommodate the needs of the local markets.
Countries in the region are actively strengthening their defense capabilities. Annual imports of weapons and military equipment in Latin America doubled during 2008 – 2011, rising to nearly US$ 25 billion. Venezuela and Brazil are the most active buyers of weapons.
Russia accounts for approximately 30% of global weapons and military equipment exports to the region. Russia is interested in expanding its military exports because it sees Latin America as promising new markets which can augment its traditional export markets of China and India.
Therefore, both sides should benefit from developing and expanding cooperation between Russia and Latin American countries: Russia is important for Latin America as a source of technologies and as a strategic co-investor, while Latin America is important to Russia as an opportunity to strengthen the international position of Russian companies and a way to enter global high-technology markets.
Latin American Countries and Rostec. In a telling manifestation of strengthening high-tech cooperation between Russia and Latin America, not only Russian resource majors, but also advanced technology manufacturers, including Rostec Corporation, are entering regional markets.
The prospects for Rostec’s operations in the region were discussed late last year in Moscow during a business seminar on developing cooperation between Russia and Latin America. Rostec Corporation has provided specifics for its proposals for shipping high-tech goods and services, also confirming its interest in joint projects in the field.
Rostec’s participation in the LAAD Defense & Security 2015 trade show confirmed the high level of possible interaction between Rostec’s subsidiary holding companies and Latin American countries. Rostec has brought its latest models of weapons systems and technology solutions developed by its subsidiaries.
Rostec Corporation exhibited, among other equipment: combat reconnaissance and military cargo helicopters Mil Mi-28NE, Kamov Ka-52, Mil Mi-171Sh, multirole Mil Mi-171A1, Kamov Ka-32, advanced helicopter Kamov Ka-62, military training jet Yakovlev Yak-130, anti-tank missile system Kornet EM, man-portable AA missile system Igla S, AA missile and gunnery system Pantsir S1, as well as the Safe City integrated data processing and communication system that ensures effective operation of quick-response teams, can help to anticipate and prevent incidents and crime, including any incidents during high-profile events like Olympic Games.
Russian Helicopters Holding Company, a Rostec subsidiary, had talks with regional partners about helicopter deliveries for regional armed forces and also for police units and search and rescue missions.
Technodinamika, another Rostec holding company, participated in the trade show under its new name for the first time, presenting a fire safety system for the new Russian airliner MC-21; the system was developed in cooperation with Curtiss-Wright.
The parties discussed development of a range of projects in talks with officials representing Brazil at the trade show.
Rostec Corporation is planning to continue and expand strategic relations with countries in Latin America on the basis of trust. Rostec is currently in talks about deliveries of its products as well as establishing interaction with regional partners for joint projects in high-tech development and manufacturing, according to Rosoboronexport Deputy CEO Sergey Goreslavsky, who leads Rostec’s combined delegation in the region.
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