New presidents Jair Bolsonaro in Brazil and Andrés Manuel López Obrador in Mexico are daring to make a fresh start on a grand scale. The one is politically on the right, the other to the left. Both hope to win points by eliminating such problems as crime, corruption and bureaucracy. And the economy is to be stimulated. This is impossible without foreign input. That much seems clear to both countries – dubious remarks and inflammatory slogans by both presidents notwithstanding. In 2019 we will see how exactly the rhetoric of these new heads of state translates into reality.
One thing is for sure: these new starts are bound to turn the entire region upside down. Brazil and Mexico not only account for around sixty percent of Latin America’s economic output, they also exercise a stabilising function on the continent. Their slightest changes of course are certain to leave a mark on neighbouring countries. Although German companies are well represented and integrated in Latin America, there is still much more potential. So the question now is not so much “whether” one is involved in Latin America, but rather “how”.
Indices of growing confidence are already increasing. A leap of faith is being made by investors from all around the world, particularly in the case of Brazil. And indeed, the country is in a solid economic position. The financial market is more buoyant than ever. And not for nothing – such a political and economic turnaround offers opportunities that have to be seized promptly. By German companies, too. Should we fail to do so, we run the risk of missing out. And this would come at a high price, since the region is, and remains, an important market.
LADW Chairman, Member of the Board of Management Volkswagen AG and CEO TRATON GROUP
Sunday Brief N°10
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