World Bank projects Latin America's economic activity could grow by 3.7% in 2021 as countries relax COVID-19 restrictions.
World Bank Projects Economic Growth in Latin America
Latin America's economic activity could grow by 3.7% in 2021 as countries relax the restrictions imposed to control the coronavirus pandemic, but “the rebound will be very weak” and in a negative scenario it could be even less than 2%, the World Bank said Tuesday.
As reported by the Weekly Journal, regional growth will be less than the 4% global forecast, mainly because Latin America has been one of the regions hardest hit by the COVID-19 outbreak, both health-wise and economically, according to the January edition of the World Economic Outlook report published by the international financial organization.
The best scenario for Latin America would occur if restrictions are relaxed, commodity prices stabilize and external conditions improve, the World Bank considered in its report.
The outlook, however, presents risks and activity could decrease due to the impossibility of containing the pandemic, problems related to debt and external financing, social tensions and economic damages related to the pandemic that were not foreseen, the World Bank warned.
"The deterioration in investor confidence is a serious risk to the economic outlook," the report said, noting that creditworthiness has declined throughout the region.
Fleeing Lockdown, Americans Are Flocking to Mexico City
In Mexico City, despite hospitals being at capacity and coronavirus cases surging, many foreigners- especially Americans- are heading to the Mexican capital.
Americans are being enticed partly by the prospect of bringing “normalcy” back to their lives in a place where coronavirus restrictions have been more relaxed than in the U.S., even as cases of Covid-19 shatter records. Some of them are staying, at least for a while, and taking advantage of the six-month tourist visa Americans are granted on arrival.
The New York Times reports that while coming to Mexico may be a relief for many foreigners, particularly those fleeing colder weather, some locals find the move irresponsible amid a pandemic, especially as the virus overwhelms Mexico City and its hospitals. Others say the problem lies with Mexican authorities, who waited too long to enact strict lockdown measures, making places like Mexico City enticing to outsiders.
In November, more than half a million Americans came to Mexico. According to official figures, almost 50,000 of which arrived at Mexico City’s airport- less than half the number of U.S. visitors who arrived in November last year- but a surge from the 4,000 that came in April, when much of Mexico was shut down. Since then, numbers have ticked up steadily: between June and August, U.S. visitors more than doubled.
The surge, however, comes as Mexico City enters a critical phase of the pandemic. The U.S. Centers for Disease Control and Prevention advised Americans to avoid all travel to Mexico.
The capital’s health care system “is basically overwhelmed,” said Mr. Tello, via WhatsApp message. “The worst is yet to come.”
New Challenges for Banks in Latin America
Latin America is the most profitable region in the world for banks after Africa, according to a recent analysis of International Monetary Fund (IMF) data by think tank Celag. The return on assets of banks in the region between 2010 and 2018 averaged just over 2.1%, three times the return in the United States and more than twice that in Europe, as reported by Explica.
There are signs that the days of Latin America’s so-called monopolistic environment may be over, as challengers from the fintech sector multiply while the banking sector mitigates the fallout from the COVID-19 pandemic.
Limited banking competition allowed for some easy benefits that might not be sustainable.
Notably, checking accounts were a source of big profits in some Latin American markets. JPMorgan’s Domingos Falavina estimates that commissions on these accounts, typically between $10 and $15 a month, are still worth between $6 billion and $7 billion a year for banks in Brazil. Banks in Brazil also charge high credit rates to retail and commercial clients in comparison to European or US standards.
Behind the Story of Odebrecht and Latin America’s Biggest Corporate Crime
Brazilian construction dynasty Odebrecht, famed for its “political panache”, has infamously operated under the Brazilian way of doing business: the art of buying influence and coming away unsoiled, or at least unincarcerated.
The family firm from northeast Brazil has grown into a multinational engineering powerhouse.
“The company’s remarkable trajectory from corporate Cinderella to paragon of dubious practices is in many ways a tale of Latin America’s biggest nation writ small,” Bloomberg reports.
The fallen Brazilian giant and the wider scam it headlined have inspired enterprising journalists, a generation of avenging prosecutors, a Netflix series (The Mechanism) and a Brazilian feature film. It was not until Brazilian author and business journalist Malu Gaspar’s recently released “A Organização,” or “The Organization,” that the Odebrecht story has been told in all its glory and shame.
Gaspar’s narrative reconstructs the company’s rise from regional contractor to continental colossus to the 13th federal criminal court of Curitiba, where Latin America’s biggest corruption probe, the Carwash case, was adjudicated. For most Brazilians, this story line is repugnant but unsurprising.