Trade between Asia and Latin America has scope to grow significantly, according to HSBC Group Chairman Mark Tucker.

Speaking at a recent forum for Asian business leaders, he said: “When we consider big global changes, many of which are being accelerated by COVID-19, we see great potential for strengthening trade and investment relationships between Asia and Latin America.”

The redirection and diversification of supply chains to make them more productive is among the trends driving change. This has created an opportunity for Latin America, especially in the light of continuing geopolitical uncertainties and the signing of the new US-Mexico-Canada trade agreement.

Mr Tucker added that Latin America has a chance to carve out a new, higher-value role for itself in global supply chains.

Over recent years, much of its trade with Asia has been driven by exporting commodities used in Chinese manufacturing. But Latin America has shown through its trade with the US that it has the capability to export and re-export electronics and machinery.

In addition, there is also scope for the growth of bilateral trade in services, drawing on each region’s areas of expertise.

Demographics and development

Shifting supply chains are not the only factor that could drive closer cooperation between the two regions, according to Mr Tucker.

Latin America’s demographics make it an attractive destination for Asian exporters. The region’s middle class is expanding and consumer demand is growing. At the same time, Asian markets offer a huge pool of potential consumers for Latin American businesses.

Closer investment ties with Asia could also help Latin America build much-needed sustainable and resilient infrastructure, supporting development in the region.