In the wake of the global pandemic, market observers express differing opinions about their economies’ ability to bounce back in the short term.
Covid-19 has coerced many businesses to go digital in a number of ways and forced the hand of those whose models had comparatively low levels of technological applications. Lingering uncertainty about the future generates questions from business owners about the “new normal” and how their model fits into a drastically altered commercial environment.
Attitudes toward the future of Latin American economies appear positive, according to the results of a survey my company conducted in June 2020. Respondents discussed the opportunities for business and economic growth in many of the region’s emerging economies, and some suggested that the industries that benefited or were at least impacted to a lesser extent were those with a strong digital focus.
I expect growth in many Latin American economies.
By GDP, the five largest economies in Latin America in 2018 were Brazil, Mexico, Argentina, Colombia and Chile. Forecasts for 2021 GDP growth in Latin America show that these countries should experience positive growth.
This projected growth appears to support the fact that the region is prepared to withstand the short-term economic effects of Covid-19. In our June 2020 survey, respondents appeared positive about the statement that “most LATAM countries forecast economic growth in 2021.”
Perceptions toward the region’s economic future are largely positive.
In our June 2020 survey, respondents were asked to comment on their perception of the current economic landscape and future of doing business in Latin America. Over 57% of respondents expressed their intent in expanding into the region. Though many (68%) indicated they were not planning to hire staff in 2020, nearly half (46.6%) confirmed that they would be looking to hire in 2021.
Qualitative data we collected indicated that in the long term, many were positive about their economies’ abilities to bounce back in a post-coronavirus era.
While some recognized the level of uncertainty around the current situation and a potentially slow recovery for some economies, others went on to say that the region’s economies demonstrate “long-term growth prospects” and that businesses in the region may even become more internationally competitive.
One respondent believed “service providers in traditional, more ‘established’ economies will lose market share to Latin American businesses and others based in the developing world. Not just in terms of costs but in terms of outlook, attitude, and ability.”
Interestingly, several markets in Central America were flagged among those showing potential for recovery and growth in the long term. Panama, Costa Rica and El Salvador garnered special attention.
Based on this feedback, continued economic growth, competitive labor costs and proximity to key American markets appear to be factors driving overall positivity toward Latin America as a viable business destination.
Regional efforts to increase digital access will favor technologically resilient businesses.
My company’s survey results also noted that “respondents working in areas adaptable to the online world, such as professional services, IT and communications, risk management, and network marketing, expressed positivity at how their industry has remained strong during this time.”
Many growing businesses may expect to incorporate varying degrees of innovative practice into their models. But the arrival and lingering effect of Covid-19 brings urgency to adaptation. Most notably, workplaces have had to migrate into remote environments in order to achieve continuity. Ensuring your team can unify and communicate with each other and key clients and partners is key to improving your organization’s overall resilience.
As I’ve written about before, with the expansion of companies such as Amazon and MercadoLibre across Latin America, bringing business online and into e-commerce marketplaces is a key element of modernizing sales channels.
Companies that remain resilient will likely incorporate technologies like artificial intelligence, machine learning, data analytics, predictive analytics and the cloud.
It’s important to prepare your organization and people for digital change. While countries in Latin America are still determining what the “new normal” means for their economic road map, digitization developments in recent years suggest growing access to and adoption of e-commerce and digitized platforms for service provision and communication in the region.
Though access to digital resources has been a challenge for some populations in the region, “The Latin American path toward digitization” report (download required) noted in 2014 that “Latin America has been increasing its level of digitization at a compound annual growth rate of 6.48% since 2004, a level comparable to East Asia & Pacific (5.63%) and Eastern Europe (7.84%). However, since 2010, digitization has increased dramatically in the region.”
Latin America will likely bring new brands and options to market.
With increasing digital access and development, I believe Latin America is positioning itself to offer greater access to its populations and therefore a greater consumer market. Businesses can achieve success in this region by recognizing the value they bring during a period of evolving preferences.
By Craig DempseyForbes Councils Member
(https://www.forbes.com/sites/forbesbusinessdevelopmentcouncil/2020/07/30/why-latin-america-is-promising-as-a-business-destination/#28f4f5a353f8)
