In South America’s politics and economy, everyday life goes on despite Corona

Many states in the region have tightened the lockdown measures again. Nevertheless, elections have now been held in Ecuador and Peru. In Brazil, the government successfully auctioned off licenses for airports, rail lines and ports.

by Alexander Busch, Latin America correspondent for Handelsblatt and Neue Zürcher Zeitung

 

Peru and Ecuador are the countries in South America that are suffering some of the worst consequences of the pandemic. Nevertheless, the states held presidential elections last Sunday. The completely different results do not allow us to draw any conclusions about the extent to which the Corona virus will change the political landscape in Latin America.

In Ecuador, the conservative banker Guillermo Lasso won surprisingly well ahead of the left-wing candidate Andrés Arauz. That pleases the business community. It hopes that Lasso could benefit from an upturn in oil and commodity prices, with which Ecuador generates its export revenues. In addition, the country recently reached an agreement with the IMF. To do so, Lasso will have to increase revenues for the state budget, but the heavily indebted country will hardly pay back loans for the next few years. Lasso is hoping for the goodwill of foreign investors toward a liberal, free-market government. He has only a small minority of seats in Congress.

In Peru, on the other hand, it remains open who will govern the country. The left-wing trade unionist Pedro Castillo, who was considered to have no chance in the polls, won in the first round of voting. Keiko Fujimori, already a two-time narrow failure as a presidential candidate and embroiled in corruption allegations, will run against him in runoff elections on June 6. Both candidates together won only a third of the votes cast. It is completely open what will happen to the Andean country, which has grown the most in South America in the last 20 years.

In Brazil, the government successfully auctioned off an entire package of concessions in what is known as “InfraWeek.” Corporations paid around $600 million for the licenses and have pledged investments of $1.8 billion.

Thus, companies bid for the licenses to operate 22 airports. Two licenses went to the Brazilian operator group CCR and one to the French group Vinci. The companies offered high premiums on the minimum price. With the auction, three-quarters of the nation’s air traffic will be handled in privately operated terminals in the future.

The west-east rail line (Fiol) with connected port for ore export in Bahia went to the Kazakh mining company Eurasian Natural Resources PLC (ENRC PLC). Five port terminals in Maranhão and Rio Grande do Sul, in turn, were bought at auction by local groups such as Santos Brasil. It is amazing that Brazil can attract investors for long-term projects amid the government’s unclear economic course and growing political tensions.

Nevertheless, it was accurately recorded that two groups of investors stayed away. China’s corporations, which were still active during the preparations for the tenders, seem to have withdrawn from Brazilian infrastructure projects. Long-term financial investors such as domestic and foreign pension funds were also conspicuous by their absence, despite the lack of long-term investment projects and high liquidity worldwide.

COVID-19 in Latin America

Development of case numbers in the region


Currently reported cases in the countries


COVID-19 vaccine doses administered


Vaccine doses administered by country

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