Despite the significant escalation in geopolitical risks in the first half of 2026, there are regions in the world economy that are increasingly positioning themselves as “safe havens” focused on building mutual economic ties. The most active in this respect appears to be the region of the South Pacific, where actors such as Indonesia, Chile and Peru are strengthening mutual economic accords and laying the foundation for a more cooperative framework for South-South economic diplomacy. Such policy impulses geared towards greater economic cooperation are intensifying in other parts of the Southern Hemisphere, rendering it a promising mega-regional platform for future trade and investment liberalization.
In the South Pacific one of the lines of economic diplomacy that we identified as being crucial for South-South economic cooperation was the Indonesia-Chile relationship. And while both sides have already concluded an Indonesia-Chile Comprehensive Economic Partnership Agreement (IC-CEPA), they are further seeking to optimize its framework with the view to expanding economic ties. On July 20, 2026, Indonesia’s Minister of Trade Budi Santoso met with the Chilean Minister of Foreign Affairs Jose Francisco Perez Mackenna to explore the venues to build on the existing momentum in economic cooperation, with particular attention accorded to boosting investment. The two countries signed a joint statement in 2024 launching negotiations on an investment chapter, with the Indonesian side expressing the hope that investment talks could be completed in 2026. According to Indonesia’s trade data, in 2025 bilateral trade between the two economies reached US$535.51 million, which represents a 12.4% increase compared to 2024[1].
Another important line connecting Latin America and the ASEAN region is the Indonesia-Peru relationship. The two developing economies signed a bilateral free trade agreement (the Comprehensive Economic Partnership Agreement (CEPA)) in 2025. In July 2026 Indonesia’s House of Representatives (DPR) Commission VI approved the ratification of that agreement, with Indonesia also granting Peru visa-free entry[2]. According to Indonesia’s Trade Minister, the implementation of the CEPA agreement could bring Indonesia’s exports to Peru to USD745 million by 2045 compared to USD 463 million in 2025, with the most significant benefits accruing to the exports of vehicles, spare parts, textiles, vegetable oils. The staged approach to boosting bilateral economic cooperation will involve the incorporation of trade in services and investment into the CEPA agreement[3].
These South-South cooperative impulses in the South Pacific are further amplified by trade liberalization and alliance-building undertaken in the Indo-Pacific region by India. In fact, the pattern of trade agreements concluded and currently pursued by India shows a significant weight accorded to the economies of the Southern Hemisphere, including the Chile-Peru-Indonesia triad discussed above. In particular, with respect to Peru both sides are planning to launch bilateral FTA talks in 2026, though the momentum for reaching the agreement has slowed recently due to India’s concerns – as stated by Commerce and Industry Minister Piyush Goyal in the beginning of July, “There are certain concerns. There are many products where we cannot offer them market access. I do not see Peru FTA happening very soon”[4]. With the Peru track slowing, India is “stepping up engagement with Chile, with the Commerce Secretary and India’s chief negotiator expected to travel to the country next month to advance [FTA] discussions”[5].
With respect to Indonesia, the visit by Narendra Modi to Indonesia in the beginning of July of this year resulted in signed memorandums of understanding for strengthening supply chains in critical minerals and steel, as well as agriculture. Importantly, India-Indonesia ties during this visit were seen as part of a broader process of building South-South economic cooperation across the Indo-Pacific – as stated by India’s leader in an address to the Indonesian parliament, “our partnership is not merely a relationship between two countries, it is a pledge of trust in the stability in the Indo-Pacific, strength of the Global South and in a shared future of the world” [6].
All these steps directed at greater bilateral economic cooperation are also starting to give rise to explorations of possible alignment across the regional blocs in the Southern Hemisphere, most notably in the South Pacific. In particular, one of the recent papers by the Australian Institute of International Affairs argues in favor of Indonesia and Australia working to bring the Pacific Island Forum (PIF) and ASEAN closer together[7]. In fact, the first formal engagement between PIF and ASEAN dates back to the end of 2022 and has since then progressed to the stage of the signing of a Memorandum of Understanding (MoU) between ASEAN and PIF in 2023. In 2025 the 58th ASEAN Foreign Ministers’ Meeting (AMM) tasked the ASEAN Secretariat to develop of a Cooperation Plan between ASEAN and PIF[8]. These steps could be further expanded to include the Pacific Alliance as a partner in building an economic triad of regional integration arrangements (Pacific Alliance-ASEAN-PIF) in the South Pacific region.
As the South Pacific undertakes further steps towards building stronger ties, other economies from the Southern Hemisphere are exploring the potential to forge closer partnerships with the region. In particular, earlier in 2026 Argentina has indicated its interest in obtaining the status of a dialogue partner within the Pacific Islands Forum (PIF) – currently Chile is the only Latin American economy to have this status[9]. More recently Argentina has also indicated its intention to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in a further sign of efforts to build economic ties in the Pacific region[10].
A lot of the accords that are being concluded by the economies of the Southern Hemisphere include provisions governing critical minerals (the recent Indonesia-Chile agreements are a case in point) – an area where the largest economies of the region have significant endowments and negotiating leverage. This is something that is likely to lead to a greater emphasis in the region’s investment policies on the creation of sovereign wealth funds (SWFs) as well as the inclusion of provisions governing the supply and sustainable use of mineral resources in trade pacts and agreements within the Southern Hemisphere as well as with key consumers of critical minerals in the Northern Hemisphere. In this respect, in each of the three sub-regions of the Southern Hemisphere, the largest economies of the North may seek to secure access to such resource supplies – in the case of the Indo-Pacific the key consumer is likely to be India, in the South Pacific it is likely to be China with competition from the US, while in the South Atlantic region it is likely to be the US as well as Europe. For the economies of the Southern Hemisphere to strengthen their leverage in these negotiations and trade pacts a coordination among themselves via common hemispheric platforms (including via the Southern Five platform within the G20[11]) could prove instrumental.
Overall, the Southern Hemisphere is increasingly emerging as one of the few segments of the global economy, where impulses of economic cooperation dominate over protectionism and cross-border conflict. The cooperative economic initiatives outlined above come on top of earlier efforts by the region’s economies to boost economic ties, including between Brazil and South Africa[12] in the South Atlantic. These positive trends reinforce our vision of the Southern Hemisphere as one of the future engines of global economic growth that is benefiting from the intensification of ties in its main sub-regions, namely the South Atlantic, South Pacific and the Indo-Pacific[13].
[1] https://en.antaranews.com/news/423455/indonesia-chile-push-ic-cepa-to-expand-bilateral-trade
[2] https://www.visaverge.com/visarequirements/indonesia-grants-visa-free-entry-to-kazakhstan-peru-macau-and-belarus-via-2026-regulation/
[3] https://en.antaranews.com/news/423111/ip-cepa-to-boost-indonesias-exports-to-peru-to-us745-mln-minister
[4] https://www.thehindu.com/news/national/do-not-see-india-peru-fta-happening-anytime-soon-piyush-goyal/article71182095.ece
[5] https://x.com/moneycontrolcom/status/2079890275678511515
[6] https://www.reuters.com/world/asia-pacific/indias-modi-meet-indonesias-prabowo-talks-defence-food-security-2026-07-07/
[7] https://www.internationalaffairs.org.au/australianoutlook/convergence-alignment-australia-and-indonesia-could-bring-asean-and-pif-closer-together/
[8] https://asean.org/wp-content/uploads/2025/12/Overview-of-ASEAN-PIF-Relations-December-2025-1.pdf
[9] https://pina.com.fj/2026/03/04/argentina-eyes-pacific-islands-forum-dialogue-partnership-as-nz-says-nations-must-decide/
[10] https://www.reuters.com/world/americas/argentina-seeks-join-trans-pacific-partnership-treaty-minister-says-2026-06-02/
[11] https://brics-plus-analytics.org/the-southern-five-a-platform-to-balance-the-global-economy/
[12] https://brics-plus-analytics.org/the-south-atlantic-realm-emerging-from-obscurity/
[13] https://brics-plus-analytics.org/global-south-builds-bridges-in-the-southern-hemisphere/
Yaroslav Lissovolik, Founder, BRICS+ Analytics
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