Latin American business executives are used to dealing with the region's political and economic ups and downs, but they have never faced anything resembling an international health crisis.
The world is going through a change, said Joseph E. Aoun, president of Northeastern, opening a webinar on the Latin American economy with regional businesspeople hosted by Northeastern's New world leaders program.
“We are seeing some fundamental changes in society now, and in the interactions between societies and nations,” Aoun said. “It's fair to say that we see the world shrinking, nationalism rising, populism rising and tensions between nations rising.”
In Latin America, the pandemic has also exposed stark inequality and destroyed entire industries. But regional businessmen said there is a sense of optimism in the business community that the region can one day compete on a global scale and even pose a threat to China as a global trading power.
Gabriel Echavaria, executive of one of Latin America's largest private companies and founder of Colombia's largest multipurpose port networks, pointed to the country's economy, the fourth largest in the region after Brazil, Mexico and Argentina.
The tourism, hospitality and retail industries were initially battered when the virus hit, resulting in dramatic unemployment. On the bright side, he said, Colombia's resilience was such that other players in the country's massive economy continued to grow, such as ports, construction, transportation and agriculture.
The country's economy didn't just come back to life after the initial shock of the virus, it took off. With more people getting out and businesses reopening, Echavarria said, there was an 87 percent increase in fuel consumption and a 40 percent increase in electricity use.
“We're seeing recovery incredibly quickly in Colombia,” he said. So fast, in fact, that “we're starting to see major importers from the United States contacting companies that export to the United States looking for new suppliers. We never expected that we would be able to compete with China.”
As part of the focus on Latin America was a visit to the US by the Mexican President Andres Manuel Lopez Obrador. President Donald Trump and Obrador greeted each other at the entrance to the West Wing of the White House in a meeting expected to renew economic ties and cooperation to fight the coronavirus, according to news reports.
The business climate in Mexico, as well as the Latin American sector as a whole, is being dragged down by too many people living hand-to-mouth in the informal economy, two other business leaders said in the online discussion, Mexican CFO Hector Grisi and the Ecuadorian businessman and investor Jorge Roca.
Almost 55 percent of the working population in Latin America work in the underground economy of for-hire drivers, domestic workers and contractors who basically live day to day, and 241 million lack access to social protection such as health benefits. There is a sense of urgency to get the population back into the formal economy as soon as possible.
“The lack of financial inclusion in Latin America is one of our biggest problems,” he said Gray, adding that 25 million Mexican adults do not have a bank account. He sees promise in his bank's initiative a few years ago that resulted in people getting their first bank account and debit card, enabling them to send and receive payments to each other.
Home loans are another boon to economically excluded communities, allowing people to join
the middle class.
of Ecuador Rocket said he sees three reasons why it will be difficult to convince many working-class citizens on the fringes of society to rejoin the economy: One reason is that existing laws make formal employment too expensive. The minimum wage is too high and hiring someone is expensive, he said.
Another reason is the low savings rate. “In Asia the saving rate is higher than the investment rate. In Latin America it's the other way around.” Rocket he said.
As a percentage of Gross Domestic Product, Asia's savings rate is more than double that of Latin America, while its investment rate is nearly 50 percent higher.
A third challenge for the region is frequent political and economic instability.
“Latin America is not in crisis” Rocket he said. “Latin America is crisis.”
One solution could be greater investment in vocational training, Colombia said Heavinessciting a German model as inspiration.
“The reason Germany has had such good employment is that people know how to do things. They are not only doctors and lawyers and economists, they are engineers, plumbers, electricians. They know how to produce goods and services that are useful to society.”
Further ccomplicating matters is that the consequences of the pandemic are becoming more severe in Latin America.
The sector has seen a nearly threefold increase in the number of people in need of food aid and among urban communities in low- and middle-income countries, who are being pushed into poverty by job losses, according to the United Nations World Food Programme.
Mexico has reported that more than 200,000 people have been infected with the coronavirus and that 32,000 have died, according to Johns Hopkins University. In Colombia more than 124,000 people tested positive for the coronavirus, 4,606 died. while in Ecuador more than 63,000 tested positive and about 4,800 died.
Many of the victims were impoverished.
“What this crisis basically shows us is that poor people are going to get poorer and the middle class is going to get hit harder, so we have to give them the means to get out,” he said. Gray.
“There is no country in the world that is safe from the pandemic. We have to be prepared because we don't know how long this will last. The people who will be able to adapt to the situation are the ones who will survive.”
Northeastern's Young Global Leaders program consists of more than 100 alumni who advise university leadership and help strengthen Northeastern's international alumni network.
Guiding discussion on Wednesday's World Outlook was Federico Ramirez, who graduated from the university in 2012 with a degree in international affairs. Emilio Botin, a 2018 graduate with a double concentration in finance and entrepreneurship. and Andrea-Regina Garcia.
He graduated from Northeastern's College of Social Sciences and Humanities last year and currently works for the government of Monaco helping young entrepreneurs.
For media inquiriesPlease get in touch media@northeastern.edu.
