For all practical purposes, the business year is over. There are still two important events pending. The November production peak, followed by the December seasonal consumption expansion, but both would have to exceed expectations substantially to change the dim results for 2015 (less than one percent growth for the region).
During the second half of the year, we will probably see more of the same: weak currencies unfortunately accompanied by timid advances in building new trade routes, and increased inflation and unemployment.
Politics will surely add some instability to this scenario. Brazil, Chile, Colombia, Mexico, even Peru, all have some issues to be resolved. Then there is Argentina, the silver country, which will probably shine again in 2016 if it modifies its economic management strategy after the October elections, and pitiful Venezuela whose government has condemned its people to live in one of the most toxic economic environments in the world.
However, a crisis should never be wasted. Difficult times force companies and governments to adjust, and often, to reinvent how they function at the same speed that households or stakeholders modify their behavior and investment strategies. For instance, why not try to achieve once and for all, better integrity standards in the region, or forcefully look for international expansion opportunities for companies?
In bad times, it is important to learn. Latin Americans will have to examine how China will further affect the region as the seven percent growth target seems increasingly harder to achieve this year, and in 2016. Much more importantly, companies and countries will have to acquire skills in finding new opportunities to thrive in Asia.
But while headwinds pick up strength, it is important to keep some things in mind. For instance, recall that slowdowns erode fiscal policy slack, and then discipline becomes the key priority. Remember the need to invest in increasing productivity, much like Mexico is doing with the implementation of its energy reform, and like some countries are doing with major infrastructure projects, which at last, seem to be overcoming their proverbial inertia. Latin America also has to remember what was learned in the past decade, about the tremendous value of social inclusion. Female and youth unemployment are still disproportionately high, and poverty is still an issue in each and every country, from Chile to Haiti. The challenge is that they will probably increase in 2015 and 2016.
Let’s not waste this crisis. Let’s discipline macroeconomics, and at the same time foster lawful, inclusive, sustainable microeconomic ingenuity in local and international markets.
Santiago Gutiérrez,
Ejecutive Editor
sgutierrez@latintrade.com