(Bloomberg) — After being battered by the pandemic like few regions in the world, Latin America finally has some tailwinds at its back.
Soaring commodity prices are bolstering exports for many countries while the push by multinationals to shorten and fortify their supply chains is prompting many of them to consider building new factories in the region. There are plenty of risks still: unemployment remains high, poverty has surged, populations are demanding political change across the region and the Federal Reserve is draining cash from the global economy.
At Bloomberg’s inaugural New Economy Gateway Latin America event in Panama City, just a short ride from the century-old canal that transformed global trade, speakers are debating the post-pandemic growth outlook as well as the preparation work needed to confront the next public health crisis, the transition to green energy and the case for cryptocurrencies in the region, among other topics.
You can follow the agenda here and the event will be streamed on the terminal at LIVE GO and on the web.
Panama Eyes China Trade Deal (8:07 p.m.)
Panama is planning to restart negotiations with China to reach a trade agreement, President Laurentino Cortizo said. The government’s main focus has been on the pandemic and economic recovery, but Cortizo said his administration is seeking a deal for Panama’s agricultural products to gain more access to China’s market.
“That’s one matter in which we are pushing very hard in the negotiation,” Cortizo said.
Panama has important relationships with both the US and China, with the US being the main user of the Panama Canal and China taking the number two spot, Cortizo said. Those relationships stretch beyond just the countries involved as they have a global impact.
Cortizo said that he wouldn’t sign into law a bill to regulate the use of cryptocurrencies, which was passed by the general assembly. He would want modifications to the bill to prevent money laundering, he said.
Covid and populism (5:20 p.m.)
The economic fallout prompted by Covid-19 has exacerbated a populism trend in Latin America that has recently driven leftist leaders to power in both Peru and Chile, according to Mexico’s former Deputy Finance Minister, Vanessa Rubio Marquez.
Panama’s Commerce and Industry Minister, Ramon Martínez de la Guardia, also sees coronavirus-related hardships fueling populist views in the region and highlights the importance of engaging citizens and the private sector in decision-making processes.
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“Governments come and go but if you keep private sectors and citizens involved you have less risk of falling into traps,” he said.
For Jorge Guajardo, a former Mexican ambassador to China, the only way to address populism is through social media regulation.
“Everybody who studies populism says we have to address social media and by social media I mean algorithms,” he said. “We’re doomed to a populist future unless we address social media.”
Supply chain, carbon neutral (4:45 p.m.)
The supply chain remains at the top of the conversation, though it’s gotten better in some ways because it’s no longer a shock, said Sandra Campos, Shoulder Up Technology Acquisition Corp. CEO
The Panama Canal is moving to be carbon neutral by end of decade, creating the opportunity to price services based on carbon emissions, which hasn’t happened in the past, said Ricaurte Vasquez Morales, Panama Canal Authority Administrator.
CBDCs shield nations from $2 trillion crypto meltdown (4 p.m.)
Crypto’s plunge over the last few months has eroded about $2 trillion in value from markets, according to Alexandre Tombini, Chief Representative of the BIS Office for the Americas and former Brazil central bank chief.
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At the same time, central bank digital currencies, known as CBDCs, are having a moment – part of the appeal being how different they are from crypto currencies. While people interested in crypto are cross border traders, CBDCs are kept within their own borders. So while they bring much of the benefits of crypto, helping digitize the economy, they also keep nations shielded from volatility.
“We stay far away from crypto currencies,” Jamaica central bank governor Richard Byles said. “I’m not a fan, neither personally nor as a central banker.”
Panama canal traffic jam to last (3:30 p.m.)
The Panama canal’s current conditions are likely to remain the same for the next half year, Ricaurte Vásquez Morales, the Panama Canal Authority Administrator, said in an interview.
The canal is seeing delayed impacts from China’s Covid-19 lockdowns, according to Vásquez Morales. There was a 18% vessel increase in April versus last year, though numbers are down in May from 2021, he said.
Panama expects to grow 8% in 2022, fastest in the region (1:40 p.m.)
Panama is forecasting it will continue posting the fastest growth in the region, with 8% expected for 2022 after 15% growth in 2021, said Foreign Affairs Minister Erika Mouynes in an interview with Bloomberg TV’s Caroline Hyde. That’s even as the war in Ukraine leads to higher food and fertilizer prices, two key issues for countries in Central America, which are net importers of both of these.
“We need to talk more about the local consequences about what’s happening in the conflict,” said Mouynes. Panama recently convened a regional summit to discuss the issue. “We’re concerned about how we deal with this on a regional basis.”
Read More: Migration Through Panama Plunges 94% From Peak, Minister Says
Mouynes also noted that while Panama continues to be singled out as a tax haven, that’s a “misplaced” view given that a recent report had several G-7 countries at the top of a ranking, with Panama falling below the top 15 globally.
Marriott bullish on LatAm travel, plans for more hotels (12:10 p.m.)
The president for Marriott International, Craig Smith, said the company aims to double the number of its hotels in Latin America within three to four years. With 300 hotels already in the region, Smith said plans are underway for at least another 100.
“We’re really bullish on the region,” Smith said.
He added that demand for travel in Latin America hasn’t been impacted by the surge in inflation rocking the global economy.
It’s “affecting us more on building costs,” Smith said. “It hasn’t affected people traveling.”
Marcelo Claure on opportunities in Latin America (11:50 a.m.)
Marcelo Claure, the influential venture capital investor best known for turning around Sprint and preparing WeWork for its public listing during his time as chief operating officer for SoftBank International Corp, said he’s a “huge believer” in Latin America.
Claure said he looks beyond “temporary” company valuations as the current risk environment leads to a tighter funding environment for startups, and that startups will have to focus on faster, more profitable growth. He expects investor attention to remain in the region, even as funding slows in the next two years.
“The next 5 to 10 years will be some of the most exciting,” he said in an interview. “We won’t go back to the “dark ages” before 2018 where investment in LatAm was $1 billion, compared to $10 billion for India. We’ll be at least the same as India or as Southeast Asia.”
Claure, who took the helm at his family office Grupo Claure since leaving SoftBank in late January, said he’s closely following companies involved in the “three revolutions” of our time: artificial intelligence, electric vehicles and blockchain.
Panama canal traffic, new container port (11:30 a.m.)
The global shipping bottlenecks rattling industries and consumers in the pandemic era were plain to see for the politicians, economists and investors gathering for the event in Panama.
Separately, Notarc Management Group, a Latin America-focused investment firm, announced on the sidelines of the event that it’s partnering with a unit of Mediterranean Shipping Company to take over construction of the $1.4 billion Panama Canal Container Port.
Opportunities still abound in technology (11:25 a.m.)
Current down cycle and tighter liquidity in startup space in Latin America is temporary, Sumita Pandit, chief operating officer of dLocal said.
“Cycles are good, it helps you go through these ups and downs to actually strengthen your business model,” Pandit said. “There will be some companies that will not survive the capital constraint that will probably come in the next few quarters but I’m absolutely certain that the cycle will turn and we will again see the abundant availability of capital.”
Latin America technology industry is still missing more female-led companies and founders, according to Mate Pencz, founder and co-CEO of Loft.
Bachelet discusses Chile, human rights (10:50 a.m.)
UN High Commissioner for Human Rights Michelle Bachelet, speaking in an interview with Bloomberg’s Stephanie Flanders, threw her support behind Chile’s draft constitution, saying she would like to see it approved in September’s national referendum even as polls show growing rejection of the document among her fellow nationals.
“It’s offering a new social contract,” the former Chilean president said.
More broadly, she voiced concern about the short-term outlook for Latin America as policymakers battle the global wave of inflation sparked by the post-pandemic recovery and Russia’s invasion of Ukraine.
On defining Latin America’s alliances (10:25 a.m.)
A panel discussed where Latin America’s geopolitical allegiances should lie and whether nearshoring is really happening amid supply chain disruptions.
“Latin America should be as promiscuous as it can be to play every side for whatever it can,” Marko Papic, partner at Clocktower Group said. “Multipolarity is a great opportunity.”
Inter-American Development Bank head Mauricio Claver-Carone said the US remains the most reliable partner as the biggest foreign direct investor and the realignment of supply chains at the moment represents the biggest opportunity of a lifetime.
“The US has very few free trade agreements but the ones we have are in Latin America,” Shannon O’Neil, Vice President of the Council on Foreign Relations, said. “So companies here have preferred access to the largest economy in the world.”
Michael Bloomberg on role Latin America plays (9:38 a.m.)
Michael Bloomberg, founder of Bloomberg LP, said in a video message to kick off the event that Latin America has a “critical role” in helping confront some of the world’s biggest problems.
Latin America is an economic engine, fertile ground for entrepreneurship, is a global tradeway and is a critical part of our natural defense against climate change given its biodiversity.
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