US multinational companies are facing declining sales in Europe, with some companies barely making any profit.
According to an InvestorPlace article, “The double whammy of a shrinking Eurozone economy and weaker euro makes an already depressed revenue picture for some major U.S. multinationals all the much tougher for 2013.”
So where are US multinationals heading? Latin America.
Many multinationals are not only greatly profiting through their operations in Latina America, but in countries such as Costa Rica, the global companies are finding it financially rewarding to provide numerous jobs, which tend to stimulate the economy there as well.
According to InsideCostaRica.com, IBM operates in Costa Rica and plans to employ 1,000 more people by 2014. St. Jude Medical Company also intends to create numerous job opportunities for those in Costa Rica in 2013.
As stated in a Reuters article, Fitch Ratings recently allocated Costa Rica’s global bond (with a maturation date in 2022) a projected “BB+” rating.
“Costa Rica’s ‘BB+’ ratings are supported by its institutional strength and favorable social indicators. A history of political and macroeconomic stability combined with a skilled labor force continues to attract foreign direct investment and foster the development of highly competitive export-oriented industries” (Reuters).
The global think tank, Council on Foreign Relations, affirmed in a recent article that US foreign direct investment in Latina America has remained consistent over the years and amounted to over $25 billion in 2011, which was about 20 percent of all FDI in Latin America for that year.
It seems as the financial crisis in Europe only deepens, US multinationals will place a larger emphasis on their operations and investments in Latin America as 2013 approaches.