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Abril de 2020 Página 2 de 2

Coronavirus: impact on the world's factory

Carlos Rodríguez, editor of Reportero Industrial.

The pandemic has upset production, markets and supply chains globally, learn how and to what extent.

The most vulnerable economies in Latin America are these with great trade integration with China. In the case of Mexico, although China is not as significant as a destination for its exports, it is the main supplier of raw materials and supplies to its most robust industries - according to statistics from the Ministry of Economy, in 2018 Mexico imported USD 83.5 billion from China while exporting USD 7.4 billion to that country. Therefore, Mexico is in a scenario where it must quickly seek to supply its supply chains in order to continue keeping plants running.

Brazil also faces a challenging landscape, as much of its economy is based on its trade relations with China. The Asian country is the main destination for Brazilian products, which represents 22 percent of its total exports (Chile and Peru are also net exporters to that destination). Brazil is the main recipient of Chinese direct investments in Latin America, aimed especially at the energy and infrastructure sectors. In addition, China ranks second on its list of suppliers, after the European Union, with a participation percentage that reaches 19 percent.

The global economy faces a challenging landscape, with specific focuses that require the agile implementation of policies by governments to safeguard human lives, markets and companies. Such measures should include tools such as loans to make up for the companies' lack of liquidity, strategies to ensure it in financial institutions, cuts in interest rates and asset purchases.

Countries that have already traveled a path that the rest of the nations have yet to overcome can serve as an example: China temporarily renounced social security contributions for companies and South Korea expanded loans for commercial operations and granted loan guarantees. for the small and medium-sized companies affected. Although it is a challenging scenario, in Latin America the economies have a history of volatility so ingrained that it makes them resilient in the face of crises, because surely the Latin American industry will be victorious and will remember this moment as what it is, one more crisis, a focus of new challenges and opportunities.


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