Although Latin America is constrained today by its telecommunications infrastructure and limited Internet access, Forrester Research, Inc. (Nasdaq: FORR) predicts that eCommerce in Latin America will grow to $82 billion in 2004. As in other geographies, Latin America’s Internet economy will be principally powered by business-to-business (B2B) trade. B2B online in Latin America will account for $76 billion in 2004 — or 93% of the total.

“eCommerce in Latin America today faces significant challenges, but there are clear signs that the economic climate is dramatically improving,” said Stuart D. Woodring, vice president, research for emerging Internet economies. “The combination of aggressive efforts to stabilize currencies with liberalized trade policies will make Latin America — especially Brazil and Argentina — fertile ground for the rapid adoption of global eCommerce.”

In addition to public policy support, full engagement in eCommerce requires a critical mass of technology linkages: phone lines, PCs, Internet hosts, and cell phones. Latin America’s current limited access to hosting and phone lines will stunt this region’s eCommerce growth. Even though the region lags behind its northern neighbors, partnerships and newly established corporate bases in Latin America are the first signs of growth.

“eCommerce in Latin America will thrive in the coming years thanks to a rollback of protectionist policies, innovative uses of mobile technology, and pressure from Internet-sophisticated global trading partners,” said Matthew R. Sanders, associate analyst. “Brazil will lead this region by trading $64 billion online by 2004. MERCOSUR neighbor and principal trading partner Argentina will follow with more than $10 billion in online sales.”

Global Outlook For eCommerce
Forrester estimates that eCommerce will account for 8.6% of worldwide sales of goods and services in 2004. The expansion of online trade, however, will be highly concentrated, with 12 countries representing nearly 85% of worldwide Net sales. The US will continue to be the global eCommerce leader, with online sales reaching $3.2 trillion in 2004. The Asia-Pacific region will see a total of $1.6 trillion in eCommerce in 2004, closely followed by Western Europe, which will hit $1.5 trillion. Plagued by infrastructure deficiencies, eCommerce will reach $82 billion in Latin America, while Eastern Europe, Africa, and the Middle East will contribute a combined $68.6 billion in 2004.

For the recent Brief “Global eCommerce Approaches Hypergrowth,” Forrester examined the conditions underlying eCommerce growth in 52 countries. These conditions include the regulatory environment, technology infrastructure, connection to international supply chains, and existence of regional trading blocs.