Latin America is becoming an increasingly attractive export destination for Finnish companies. Market reforms in Argentina and the pending EU–Mercosur trade agreement are reshaping the region’s business landscape.

Amid geopolitical uncertainty, South America is emerging as an increasingly attractive export market for Finnish companies. The planned EU–Mercosur free trade agreement, intensifying competition between China and the United States, and improving political and economic conditions in parts of the region are strengthening its appeal.

Finnish products and services have long been in demand, but a more stable business environment and improved financing conditions are now making transactions easier to execute. Argentina in particular has drawn attention following President Javier Milei’s rapid shift toward market-oriented economic policies. For years, weak public finances and political volatility complicated business despite underlying demand. Today, improved market conditions and the removal of currency controls have reduced political risk and expanded access to export finance.

Political Risk Remains Elevated in Argentina

The Milei administration has implemented sweeping market reforms, sharply reducing inflation and restoring confidence among international institutions and investors. At the same time, domestic political tensions have intensified, potentially slowing structural reforms, before positive results will materialize.

Political volatility was evident in 2025, when Milei’s coalition first suffered a major defeat in Buenos Aires provincial elections but later secured a strong mandate in midterm elections. With the 2027 presidential election approaching, risks remain significant, driven by reform fatigue, social resistance, and exchange-rate pressures.

Between China and the United States

Although Milei has distanced Argentina politically from China, Chinese investment—particularly in energy and mining—continues. China remains Argentina’s second-largest trading partner after neighbouring Brazil, with the United States close behind. Meanwhile, the United States has strengthened its influence through IMF cooperation and political support, contributing to financial stabilization efforts.

Argentina’s position between two major powers creates both opportunity and strategic uncertainty.

Energy and Mining Drive Growth

Mining and energy, alongside agriculture, are the region’s key growth engines. Foreign interest in Argentina has increased substantially, supported by the Vaca Muerta oil and gas field and extensive lithium and other critical mineral reserves. Following the reopening of financial markets and the lifting of capital controls, foreign companies have slowly regained confidence and accelerated investments. Energy investments alone are estimated to have reached approximately USD 15 billion in 2025, with mining close behind. Investment has also been encouraged by the RIGI incentive framework for large-scale projects introduced in 2024.

In Chile, copper and lithium remain economic cornerstones despite constraints such as water scarcity and declining ore grades. Long-term global demand for critical minerals supports strong market prospects. Paraguay, for its part, offers stable conditions and climate-focused policies that favour forest industry and energy investments.

Telecommunications and Forestry Opportunities

Argentina’s telecommunications sector is benefiting from capital market liberalization and regulatory reforms. Increased foreign investment is creating demand for infrastructure and digitalization solutions. The country already has a dynamic SME ecosystem in digital services, which stands to gain from improved financial stability.

Although Argentina is not a leading forestry producer compared with Brazil, Chile, and Uruguay, trends in the bioeconomy and renewable energy create opportunities for Finnish technology and equipment suppliers. Forestry investments require long-term stability. Paraguay has emerged as a regional hotspot, with its first pulp mill investment underway and additional projects planned. Argentina is still seeking to strengthen long-term investor confidence in its largely untapped forest resources.

Economic Outlook 2024–2027

Argentina’s economy is gradually recovering, with growth projected at around 3% in 2026 and onwards. However, exchange-rate volatility and political uncertainty continue to pose risks. Rebuilding investor confidence remains challenging after decades of economic turbulence.

Paraguay has been one of the region’s most stable economies, growing steadily for two decades apart from the pandemic years. Growth is expected to remain near 4% annually, supported by foreign investment, and its currency has been most stable in the region. Chile, often considered the region’s most politically stable economy, is pursuing growth through mining, renewable energy, and an emerging hydrogen sector. Strong global demand for critical minerals continues to attract investment.

The EU–Mercosur Agreement

In December 2024, the EU and Mercosur reached a political agreement on a landmark trade deal that would gradually eliminate over 90% of tariffs. The updated agreement includes stronger sustainability commitments, including provisions related to deforestation and the Paris Climate Agreement, while granting Mercosur countries greater industrial policy flexibility.

Although ratification has faced delays due to legal review in the EU side, the commercial provisions may be soon applied provisionally. Over time, the agreement would enhance market predictability and openness. Reduced tariffs on industrial goods and machinery would benefit Finnish suppliers in energy, mining, and telecommunications infrastructure and also expand access to public procurement markets.

Conclusion

Argentina offers significant opportunities in energy, mining, and telecommunications between 2024 and 2027, but political risk remains considerable because of the election cycle and polarized politics. Paraguay and Chile provide greater stability within the regional landscape. If implemented, the EU–Mercosur agreement could substantially strengthen the competitive position of Finnish companies and reduce trade barriers across the region.

Latin America is important market also for Finnvera. We are open for cover in the region and export credit guarantees can be applied to export transaction in the region.

Mika Relander

Senior Adviser, Country Risks and Trade Facilitation

Finnvera

Text and pictures: Mika Relander