Legal uncertainty is the main deterrent factor, in addition to poor infrastructure.
14ymedio, Madrid, May 6, 2025 — History repeats itself, but for the worse. Spain is still one of the countries with more investors in Cuba, but it is the Latin American country where Spaniards invest the least, and the percentage has been reduced by half in just one year. In 2024, only 2% of Spanish companies with presence in the region had contributed fresh capital the previous year, mainly due to “deficient infrastructures” in Cuba. Now, only 1% would do so, and the most relevant factor is “legal uncertainty.”
The data appear in the 2024 Panorama of Spanish Investment in Ibero-America, published this Monday by IE University, Auxadi and Iberia and presented by Casa de América in Madrid. It presents the consequences of Donald Trump’s tariff policy that, although affecting countries in the region to a lesser extent than in other areas, influence the business prospects of Spanish entrepreneurs.
“It seems that more Spanish companies will opt for a policy of waiting for developments before making new investment decisions. The commitment to the region remains strong, but we are waiting to see what happens in the United States,” says the document in its introduction. The data reflect a drop in investment plans in Latin America of up to 13 points, from 76% last year to 63% this year. In addition, 30 per cent intend to maintain their plans and 7 per cent to reduce them.
From the 80% of SMSEs willing to invest in the region in previous years, it has fallen to 50%
The percentage falls sharply when looking at small and medium-sized enterprises (SMEs): from 80% willing to invest in the region in previous years, it has fallen to 50%. The change is so significant that, for the first time since the report was drawn up, companies expect sales to rise more in the European Union than in Latin America.
The report barely mentions Cuba, except to highlight that it is on the list of countries where Spaniards plan to invest. Mexico, despite being one of the countries most affected by tariffs, repeats as a priority objective for companies in Spain, followed by Colombia, Chile, Peru and Brazil in that order. Costa Rica and Paraguay improve, while the rest remain stable.
Argentina will have “enormous difficulties,” but entrepreneurs are optimistic about its development for 2025 and give it a 3.59 (out of 5 points) of confidence. Uruguay and the Dominican Republic follow, but Mexico is losing ground because of its “high exposure to the U.S.” Nicaragua, Cuba and Venezuela have 2.65, 2.31 and 2.09 respectively.
One of the questions measured in the report is what advantages Latin American countries offer that encourage investment and give access to an attractive domestic market. Mexico, Brazil and Chile are highlighted (67%), followed by a skilled labor force in Mexico, Chile and Colombia (33%). In addition, there are access to raw materials (Brazil, Chile and Argentina), free trade agreements with third countries (Mexico, Argentina and Chile), competitiveness in the region (Mexico, Chile and Brazil) and advantageous geographical location, where Cuba again loses the opportunity to stand out and entrepreneurs prefer, once again, Mexico, Panama and the Dominican Republic.
Cuba does appear in the opposite table: that of the region’s disadvantages. Although political instability (76%) is the worst of the identified risks -highlighting here Venezuela, Peru and Ecuador – followed by exchange rate (56%), with Argentina, Brazil and Chile at the top, legal uncertainty is the terrain led by Cuba. Followed by Venezuela and Bolivia, these are the countries where entrepreneurs most fear that some legal regulation will arise that will cause them harm.
The table closes with citizen insecurity (33%), economic slowdown (27%) and social instability
The table closes with citizen insecurity (33%), economic slowdown (27%) and social instability.
Cuba once again fares badly for the countries with more complex taxation. It is in fourth place with 3.83 (of 5 points), behind Brazil, Venezuela and Argentina, while the Spanish value the simple systems of Panama, Paraguay, Uruguay and Honduras. The latter has a score of 2.07, relatively far from the Uruguayan 2.80.
The report points out that one of the most significant changes is entrepreneurs’ perception of China as a competitor. Last year, 70% of respondents believed the Asian giant was not a significant competitor, compared to 55% this year. In addition, in the previous report 15% saw China as a “rather important” competitor, ten points less than this year when the amount rose to 25%. And those who saw China as competition rose from 15% to 20%.
For cities, the Mexican capital is still the preferred metropolis for Spaniards to locate their headquarters in Latin America (33%), far ahead of Bogota (15%) and Miami (14%). The latter, on the other hand, remains the preferred option for living, as it gains in safety, leisure and quality of life over Mexico City. The second city most chosen by Spanish entrepreneurs to move to is Santiago de Chile, which ties with Panama City.
In general terms, the document concludes that Donald Trump’s arrival at the White House has “turned the entire economic and geopolitical landscape upside down” and that the trade war he has embarked on has “radically” changed the economic outlook, which is reduced, according to the forecasts of the International Monetary Fund.
Translated by Regina Anavy
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