Peru, Colombia and Chile are catching up: trends support the investment outlook for Latin America

• James Syme
  Senior Fund Manager
  J O Hambro

We believe the principal investment implication is greater policy predictability and a more supportive environment for long-term investment, particularly in natural resources and infrastructure. Institutional constraints remain significant, meaning reforms are likely to be gradual and uneven despite a common political direction. We currently have no exposure to Peru, Colombia or Chile, whilst maintaining overweight positions in Mexico and Brazil. We continue to monitor developments across the region for future opportunities as we believe these trends are supportive of the broader Latin American investment outlook.

More economic pragmatism

The political backdrop across the Andean region has improved materially over the past year. Chile led the shift with the election of a conservative government in late 2025, marking a move towards greater emphasis on economic growth, investment and public security. Peru’s June 2026 presidential election returned a more market-friendly administration following years of political instability and repeated changes of leadership, although the narrow result suggests governance challenges will remain. Days later, Colombia’s June 2026 election brought a more conservative president who has already appointed a finance minister focused on restoring fiscal credibility after several years of expansionary fiscal policy.

While the pace of reform is likely to differ across countries, all three have moved towards governments placing greater emphasis on macroeconomic stability, private investment and investor confidence. As top-down country-focused investors, we believe political turning points can precede changes in economic fundamentals and equity market performance.

Fiscal discipline creates scope for growth

For capital markets, what matters most is not ideology, but the investment environment it creates. Long-duration mining, energy and infrastructure projects require confidence in regulation, taxation and licensing. A more predictable policy framework should encourage capital investment, strengthen export capacity and, over time, support broader economic growth through stronger currencies and higher employment, incomes and domestic demand.

The macroeconomic backdrop should improve, albeit gradually. Loose fiscal policy under previous administrations contributed to a relatively hawkish monetary stance across much of the region. If governments can re-establish greater fiscal discipline, central banks should be able to ease monetary policy; together with stronger private investment, this should support domestic demand.

Success is not guaranteed. Peru continues to face weak political institutions and deep polarisation. Colombia’s fragmented Congress means coalition building will remain essential for meaningful reform. Chile retains stronger institutional foundations than its peers but translating legislative reform into higher investment and faster growth will inevitably take time.

Overall, we believe the direction of travel has become more supportive for investors across the Andean region. The outlook will ultimately hinge on the outcome of Brazil’s presidential election in October.