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Should you insure your assets in the United States? After the rising in Latin American inflation, this is a possibility

Should you insure your assets in the United States? After the rising in Latin American inflation, this is a possibility

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Generalized inflation in Latin America will remain high for the rest of the year; according to the Economic Commission for Latin America and the Caribbean (ECLAC), inflation in the region reached 7.5 percent in March 2022, an abnormality that raises the prospect of insuring assets and relocating them to more stable economies; the United States appears to be an option, as its GDP is expected to be around $1 trillion in 2026.

One of the most common ways to secure assets among Latin American investors is in figures such as real estate, an investment model that encompasses everything related to the real estate market: a fixed and beneficial asset for investors. In 2020, home sales volumes in the United States soared to 820,000, indicating the portal Statista, the largest increase observed in recent years.

After the pandemic, inflation became a common denominator

Latin America appears to be expanding and contracting at the same time; it appears that political processes have agreed to coincide in a continent divided not only by the Andes mountain range, but also by political and social struggles that have occasionally resulted in uncertainties and economic crises among industrialists, that is to say, the wave of inflation that the region is experiencing today is becoming more widespread and becoming a trend that produces uncertainties in a market that had been on the rise and that, according to the International Monetary Fund (IMF), it will begin to slow down by even2.5% in 2022.

According to the entity, economic growth in Brazil, which was 4.6 percent in 2021, will slow to 0.8 percent this year; Mexico will grow at 2%; Colombia will probably grow at 5.8 percent; and growth in Chile and Peru will be 1.5 percent and 3 percent, respectively, indicating significant reductions from the double-digit rates of the previous year.

To explain these macroeconomic phenomena, we must look at local and global milestones, the most recent of which are the Covid - 19 health crisis and the war between Russia and Ukraine, both of which resulted in price increases in basic products, primarily hydrocarbons, some metals, food, and fertilizers.

The Latin American region has seen extensive inflation as a result of these worldwide events. Venezuela's inflation rate is anticipated to reach 500.0% by 2022, followed by Argentina at 51.7%, Haiti at 25.5%, Colombia at 7.7%, Chile at 7.5%, and Mexico at 6.8%, according to the IMF.

Everything seems to point to the economic slowdown being caused, for example, by government-created uncertainty. According to the Cadem portal, Chilean President Gabriel Boric's popularity has dropped from 50% to 36% in less than two months in office, a phenomena that occurred after Congress rejected two proposals allowing Chileans to take up to 10% of their assets for retirement.

Crisis or opportunity?

After the recent uncertainties in the region, securing your assets in an economy like the United States is a fantastic option. Argentina, which has the highest consumer price index, a phenomenon not seen since 1992, is one of the countries most hit by the crisis. The National Institute of Statistics and Censuses (Indec) grew 6.0% monthly in April 2022 and combined a variance of 23.1% in the first four months of the year.

This widespread uncertainty in Argentina, which has been recovering since the epidemic, has had an impact on citizens' pockets, according to Indec data: “The division with the highest increase in the month was clothing and footwear 9.9%, followed by restaurants and hotels 7.3% and health 6.4%. This last case resulted, to a large extent, in an increase in the share of prepaid medicine”.

That is why the United States presents itself as a viable and accessible investment prospect, owing to the facilities that the northern country provides to foreign investors.

According to the LDC's 2020 Latino GDP study from the United States (USA), the presence of Latinos in the US is even compared to the GDP of Latin American countries, if the Latino market in the US is included. If the United States were its own country, it would rank ninth in the world's economy, ahead of countries like Brazil and Mexico. According to the webpage, the Latino community will be worth $750 trillion by 2020. One more proof of the success of Latin Americans in the northern country.

Another benefit of insuring your assets in the United States is the country's monetary stability. According to the International Monetary Fund's survey on the composition of official foreign exchange reserves (COFER), the US dollar accounts for about 59% of the approximately 12 trillion dollars in global foreign exchange reserves allocated in the third quarter of 2021, a huge difference from the euro's 20.5 percent and the yen's 5.8 percent.

Diego Prieto
Press Officer

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