Latin America has not been spared the effects of the current global economic crisis. While strong domestic markets support countries such as Brazil, a decrease in external demand could spell trouble. Regulatory structures, tax models and interest rates need to be reformed.

How can international companies capture the right opportunities in Latin American markets at the right time?

Is Latin American market growth sustainable?

Latin America is perhaps the world’s most globalized economy and relies for more than a third of its growth on in-bound foreign investment; export income, in-bound remittances, foreign tourism receipts and foreign loans.

Weak economies in the United States and Europe have hurt Mexican, Central American and Caribbean growth since the onset of the financial crisis in late 2008. Conversely, strong Asian demand for commodities has been a boon for South American economies.

Most analysts predict a softening effect on metals and energy commodities in 2012 to 2013, as over-indebted developed economies de-lever their economies and new energy and mining supply sources come on line that compete directly with Latin America. Examples include Australian iron ore competing against Brazil, Zambian copper competing against Chile and Iraqi oil competing against Venezuela.

Declining commodity prices would take some liquidity out of South American economies, slow consumption and weaken currencies. All that said, Latin America’s internal economies are increasingly solidified by a competitive banking sector and improvements to productivity thanks to recent investments in technology. With few exceptions like Venezuela, and Ecuador, the political environments in Latin America do not pose a risk to the internal economies of the region.

Another important element — more specific for Brazil — is the strong internal consumption that has helped Brazil minimize the effects of the 2008 crisis and its 2011 rebound. Long term sustainability will depend on infrastructure, already an issue in the region, with visible deficiencies in roads, ports, airports and electricity, to name a few. In the case of Brazil, long-needed legal, political and fiscal reforms are also crucial for long-term growth.

Which are the most exciting Latin American markets?

Colombia is probably the most cited darling of investors. It has certainly regained investor’s credibility after almost 10 years of fighting drug organizations and by re-investing in the country’s infrastructure. Two successive administrations have worked hard to simplify the complex regulatory environment and bring safety and security to citizen and investor alike. Colombia is blessed with many natural resources, a well-educated and industrious workforce and one of the most talented and respected governments in power in the region.

Brazil remains as the strongest country, with a 200-million population, high employment rates and investments for the World Cup 20014 and the Olympics 2016.

In its turn, Mexico — whose economy depends largely on U.S. imports — will continue to gain momentum when the U.S. economy grows, a trend still uncertain.