New optimism in Latin America – investors return

Hope is growing in Latin America that vaccines against COVID-19 will soon be in mass use. Despite the again rising infection numbers and the unclear growth prospects, investors are returning. That provides for a positive change of mood.

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


It is quite possible that November 2020 will in future be seen in Latin America as the date for the turning point in the COVID pandemic. Because for some days the mood in the economy and at the financial markets between Mexico city and Patagonia begins to improve clearly. On the one hand, this is due to Biden’s victory over Trump, which investors expect to reduce tensions in world politics. This is particularly true for economies such as those in Latin America, which are heavily dependent on exports.

The risk appetite of investors has increased again, which benefits all emerging markets worldwide. However, this is also clearly noticeable in Latin America. In November, all stock markets posted double-digit gains. Buenos Aires, Santiago and São Paulo lead the index gains with a plus of around 20 percent. Almost all Latin American currencies also gained against the dollar, making stock market gains in dollars even more positive.

The good mood among financial investors is due to the growing hope that vaccines against corona can soon be used worldwide. In Brazil, Argentina and Chile, vaccination campaigns are expected to start as early as after the turn of the year.

But be careful: The growing optimism in Latin America is driven primarily by the positive change of mood in the global economy and politics. In the region itself, the situation has not improved. In the COVID Resilience Ranking of the news agency Bloomberg, Mexico, Argentina and Peru bring up the rear among the 53 largest economies worldwide. Bloomberg measures the economies and government by their success in containing the virus with the lowest level of social and economic losses. But Brazil (37) and Chile (38) also perform significantly worse in terms of crisis policy than the average of the states worldwide.

In its Latin America outlook for 2021, investment bank JP Morgan analyses that the biggest challenge for Latin American governments next year will be to get their budgets back in order. JP Morgan fears that the growing political tensions are likely to complicate matters. Further interest rate cuts, which would reduce financial spending, are hardly to be expected – except in Mexico.

COVID-19 in Latin America

Development of case numbers in the region

Currently reported cases in the countries

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