Latin America finance: Coronavirus could have a platinum lining
There is a plausible recovery scenario that would enable Latin America to exit the crisis on a better path than it was on before.
Covid-19 has caused human suffering across the region – needlessly exacerbated by wilful incompetence and chronic underfunding of public health systems – and imposed a huge economic and fiscal burden that will be accumulated over the coming years.
However, it’s not too soon to start thinking about the post-Covid 19 world and how the expected structural shifts in the global economy could be a big opportunity for Latin America.
The immediate fallout from this crisis is likely to be an increase in political tensions, leading to trade wars, trade blocs and global economic fragmentation. It will be the reverse of globalization.
Global trade peaked in 2008 (at 60.9% of global GDP) and has been declining since. This pandemic will likely fuel that fall and increase the demand for regional and domestic supply chains.
Companies in North America will be under pressure to bring more productive capacity onshore.