Overview
Latin America remains open for business, with a landscape marked by both promising opportunities and evolving risks. Economic growth is expected to continue, although at a modest pace, as regional GDP is projected to rise by about 2% to 2.5%, with some countries like Argentina and Panama outperforming the average, while others, such as Mexico are facing contraction due to external shocks from US tariffs and policy shifts. The region remains attractive to foreign investors, especially in sectors such as renewable energy, minerals, and automotive manufacturing.
However, the risk environment is dynamic. Political uncertainty, particularly around US trade policy and domestic fiscal challenges, could cause disruptions to growth and investment plans. Inflation, while declining, remains a concern in several countries, and currency volatility could increase the cost of servicing external debt. Despite these headwinds, Latin America’s resource wealth, growing consumer base, and integration into global supply chains positions it as a region of opportunity for agile investors and businesses, though success will depend on navigating a risk landscape that continues to evolve.
Corruption / Organized Crime
While reforms aimed at combating corruption and money laundering advanced in Colombia, Peru, and Argentina, organized crime and violence remain a central obstacle across the rest of Latin America and the Caribbean. Leaders have called for a robust agenda to enhance state capacity against organized crime, including police reform, improved prison systems, and strengthened judicial processes.
There is a continued need for both judicial independence – a judge’s ability to make unpopular decisions without fear of retribution – along with judicial accountability. Judicial accountability is at the center of a strong judicial system. It means applying objective criteria to measure judges’ performance through the lens of accurate interpretation and application of the law, impartiality, neutrality, ethics, integrity, and competency. This allows the court system to operate in a manner that inhibits government officials and the wealthy and powerful from exercising undue influence over the judiciary. Understanding the extent to which a given country has a reliable and transparent judicial system is one of many variables one must consider when entering a new market.
Transactions / Geopolitics
M&A activity has declined sharply across the region, down 22% in February and 23% in January year-on-year, with Brazil and Chile seeing significant drops. Argentina stood out as the only country with increases in both deal volume and value. Geopolitically, the region’s two largest economies, Brazil and Mexico, saw further declines in anti-corruption rankings, and Guatemala experienced a notable deterioration in its Corruption Perception Index[1] ranking, while Panama continued to improve.
Recent US Impact on LatAm – Rising Corruption and Investigations
Latin America has seen a rise in corruption risks and investigations over the past few months, particularly following the US suspension of FCPA enforcement, which had previously played a key deterrent role in the region.
The return of Donald Trump to the White House has created uncertainty for Latin America, namely Mexico as a close US economic trade partner. Noteworthy country developments include:
Brazil
- Major probes have continued in Brazil; particularly, the first few months of 2025 have brought a surge of high-profile corruption investigations and regulatory reforms, reflecting both persistent challenges and evolving enforcement strategies. Despite an uptick in these investigations, anti-corruption remains a moving target.
- Example 1: A massive social security fraud scheme in which officials siphoned off more than $1 billion from pensioners through unauthorized deductions, leading to the resignation of the Social Security Minister and ongoing criminal probes targeting senior officials.
- Example 2: Ongoing Petrobras/Odebrecht investigations.
- Overall transactions in the region remain below pre-pandemic levels, as high interest rates, persistent inflation, and depreciated currency have made financing more challenging despite some resiliency shown by the 16% M&A year-over-year increase in January 2025.
Mexico
- Dynamic shifts in transactions, geopolitics, and anti-corruption efforts, reflecting both opportunities and persistent risks.
- Investigations into former governors for embezzlement and drug trafficking, and a $25 million fine against Santander for weak controls / compliance failures; judiciary reform to elect judges in 2025.
- The ruling Morena party’s dominance and ongoing judicial reforms are eroding institutional checks and balances, raising concerns about legal certainty and the independence of regulatory bodies.
- Anti-corruption efforts have stagnated, as high-profile cases remain unresolved, and the government has weakened watchdog institutions and attacked civil society organizations.
- Mexico’s transaction landscape in early 2025 is marked by a sharp decline in deal volume but a surge in deal value. The real estate, tech, and renewables sectors are drawing the most interest, and nearshoring continues to offer growth potential, especially as global supply chains reconfigure.
Argentina
- Experiencing a dynamic transformation across transactions, geopolitics, and anti-corruption efforts driven by President Javier Milei’s ambitious reform agenda. “Open for business” with a revitalized investment climate and stronger ties to the US, but the risk landscape remains fluid.
- M&A activity and foreign investment are surging with two deals alone worth more than $1 billion, namely Mexico-based Vista Energy’s $1.5 billion acquisition of a 50% stake in a shale oil field in Patagonia and Telecom Argentina’s $1.25 billion purchase of the local operations of Spain’s Telefonica. Deregulation, fiscal discipline, and investor-friendly reforms are to thank for this resurgence.
- Supreme Court upheld the conviction of a former vice president for corruption.
- Renewed a $5 billion currency swap line with China despite US objections of the agreement.
Colombia
- 2025 outlook is marked by a complex interplay of economic recovery, active deal-making, geopolitical recalibration, and persistent corruption challenges.
- Implemented a landmark anti-corruption law increasing transparency and oversight, although corruption remains a key issue, with high-profile scandals and ongoing investigations impacting both the government and Congress. In early 2025, the Attorney General requested investigations into 28 members of Congress for their roles in infrastructure contract irregularities, echoing previous scandals involving disaster relief funds and legislative bribery.
- M&A activity in Colombia has seen a slight rebound, with 50 deals worth $823 million recorded in the first quarter of 2025, led by US-based investors and strong interest in fintech, healthcare, and energy – particularly electricity and renewables.
Guatemala
- Guatemala in 2025 presents a landscape of cautious economic optimism and persistent institutional challenges, especially regarding transactions, geopolitics, and corruption.
- Despite a reformist executive, Guatemala’s fight against corruption is hampered by entrenched interests. Attorney General Consuelo Porras, sanctioned by the UK and criticized by the US and EU, continues to undermine anti-corruption efforts through politically motivated prosecutions against journalists, justice officials, and President Bernardo Arévalo’s administration members.
- Sharpest decline in anti-corruption capacity in the region.
Panama
- Heightened geopolitical tension as Panama remains at the center of the US-China dispute over the Panama Canal due to Chinese presence in the region and US President Trump reasserting US influence.
- Transactions are robust, with significant surges of FDI in 2024 and momentum continuing throughout 2025. Buoyed by economic stability and sophisticated financial infrastructure.
Conclusion
As with any investment decision, it is recommended that private equity and institutional investors consider the following when weighing whether to expand in or enter new markets in Latin America.
- Is the government considered stable and does it offer incentives to foreign investors?
- Are your local partners too heavily reliant on the current government regime such that a change of leadership could impair your investment?
- How did you meet your local partners and through whom?
- Is seeking redress through the courts and/or law enforcement considered a viable option?
- Are members of your peer group already operating in the market and have any of them become embroiled in scandals or high-profile disputes?
These are just a few of the myriad questions that should be answered before making the leap and investing in a new market. The type of information sources US businesses and their advisors utilize in weighing risks in the US are considerably more comprehensive than what is available in many countries in Latin America. Many public records are neither digitized nor centralized. Powerful individuals have the ability to sanitize the public record. Who owns a news outlet is an important consideration in determining whether its reporting is considered reliable or a thinly disguised political propaganda publication.
The foregoing list of shortcomings of publicly available information is meant to illustrate that simply “Googling” someone or making investment decisions based solely on public information may not be sufficient given what is at stake. Often in Latin America, a better approach to information gathering is a combination of public record research in the local language combined with Human Intelligence to fill in the gaps where publicly available information falls short. Human beings remain the single best source of information – particularly when it comes to operating in some of the more challenging parts of the world.
Latin America is indeed open for business but the risk landscape across the region is both challenging and dynamic. Making informed investment decisions means having ready access to a variety of sources of reliable information that comes from both open source and human intelligence assets. Gathering intelligence and applying that information to the various inherent risks associated with a potential business decision is the best way to mitigate investment and operational risk.
Guest Blogger, Scott Moritz, is the founder of White Collar Forensic, an investigative, forensic accounting and compliance consulting firm. Contributor, Brianna Ford, Senior Associate at Integrity Risk International LLC.
[1] The Corruption Perceptions Index (CPI) compiled by Transparency International and is an index that scores and ranks countries by their perceived levels of public sector corruption, as assessed by experts and business executives.