Elon Musk asks for advice on how to donate part of his fortune

Latin America will grow 3.7% in 2021, according to World Bank estimates, this will occur if there are adequate measures to mitigate the pandemic and, above all, that vaccination campaigns are effective, since otherwise the expected recovery may be slow , estimates the general manager and associate for Mexico, Central America and the Caribbean of Control Risk, Daniel Linsker.

“Effective and rapid vaccination of large parts of a population will be the main factor in the recovery of a country’s economy, allowing a certain degree of normalcy to be resumed. – with a certain level of confidence – and jointly stimulating investment, production and consumption ”, estimates the manager of Control Risk.

Follow the information about the economy and the business world in Forbes Central America

Like Control Risk, the World Bank foresees that recovery will take place if vaccines are distributed quickly, in addition to stabilizing the prices of the main basic products and improving external conditions.

However, the World Bank points out that the economic rebound will be very weak in a negative scenario, in which the distribution of vaccines is delayed, with secondary economic effects, growth could be even lower, of 1.9%.

Regarding the risks and challenges for the region, Linsker points out that the main challenge for the Latin American region will be to find a response to this political, social and economic challenge (pandemic), redefining the relationship between state and citizen, and the role of the political, social and economic institutions in it.

Next, the interview with the general manager and associate for Mexico, Central America and the Caribbean of Control Risk, Daniel Linsker.

What are the political, economic and social challenges that Latin America will face in 2021?

The main challenge in the region will be to find the correct balance in spending on mitigating the social and economic impacts of the pandemic with the few available resources and an environment of austerity – all in a context of great dissatisfaction with the political status quo in the region. With the risk of a generalization, if we remember the pre-pandemic region, the vast majority of countries were going through a crisis of representativeness and a generalized discontent with the status-quo, manifested either in the streets (as in Chile, Colombia, Ecuador, Bolivia) or in the election of candidates symbolizing a break with the political balance (as in Brazil and Mexico). That discontent and that crisis, no matter what the original trigger for the protests (corruption, elimination of subsidies, etc.) was not only still there but the pandemic will make their expressions even more visible, with marked increases in problems specific and persistent such as inequality, poverty, exclusion, poor quality of public services and also political corruption and insecurity. The main challenge – I would say generational – then will be to find a response to this political, social and economic challenge, redefining the relationship between state and citizen, and the role of political, social and economic institutions in it.

What economic measures should Latin American governments maintain or change to cope with the effects of the pandemic?

We can talk a lot about subsidies, tax cuts, suspension of certain payments, etc … but I believe that each country, according to its economic matrix and financial position in 2021, will have to adopt or maintain specific policies to face the pandemic. However, there are two key issues that everyone will have to face effectively if they want to resume rapid growth and reduce the economic impact – vaccination and the informal economy. The effective and rapid vaccination of large parts of a population will be the main factor in the recovery of a country’s economy, allowing a certain degree of normalcy to be resumed – with a certain level of confidence – and jointly stimulating investment, production and consumption. Vaccination is where potentially the greatest risk for the region lies – being “lagged” in the global economic rebound due to slow or small vaccination programs, and also creating greater inequalities between countries and within countries. The second point, the informal economy, is very critical due to its social and economic impact. I believe that the Latin American countries, if they want to face the effects of the pandemic, will have to design specific programs to restart or rescue their informal economies – a huge challenge considering not only the size but precisely the lack of information and knowledge about the herself because of her condition.

From your perspective, which sectors will drive economic growth in Latin America during 2021?

I believe that to a large extent they will be the primary sectors of the economy, and in the case of Mexico and Brazil I would add manufacturing – especially in the former due to the entry into force of the TMEC and tendencies towards near-shoring or the strengthening of chains supply, making them shorter. The export of raw materials and agricultural products will probably be the first to boost economic growth, especially as advanced economies return to a certain normality, while services and consumption will take longer to resume growth, partly due to the impact that the pandemic has had on the basic income of families and the generation of business profits for the vast majority of companies in the region. It is very likely that private investment – which in a certain way was not as negatively affected as expected – will show clear signs of caution and little activity – many of the companies will see the impact of 2020 reflected on their investment and spending budget for the year. 2021, and uncertainty (and the markets) will likely keep them from seeking additional debt. Finally, there will be countries where economic growth is encouraged through investment and public spending – but the impact of these will be limited due to their relatively minor importance on the economies of the main countries in the region. What is clear is that it will grow, but it will still take at least until 2022 to return to the levels and sizes of the pre-pandemic economy.

In terms of credit ratings, how will Latin American countries fare?

With the clear exception of Argentina – mired in a long battle with its debt – almost all countries will do relatively well. The large economies of the region in general had healthy public finances for which they have managed to increase spending and / or debt without compromising their stability and ability to pay in the medium and long term. Beyond the limited wave of changes in the outlook (from positive / stable to negative) of most rating agencies, it is not as likely that large downgrades in credit ratings will be seen in the largest countries in the region. If they see cases of sovereign default or default, these will be for political reasons rather than inability to pay.

–