Trends 2021

LatAm 2021: Amid Covid catastrophe start-ups bloom

Despite 2020's Covid catastrophe, the LatAm region boasts surprising start-ups, a change in business approach and a push for digital transformation.

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It's been a bumpy year everywhere. The pandemic has shaken up business across the globe and Latin America is no different. Yet there have been some significant triumphs too, especially in terms of the start-up ecosystem across the region and the influx of venture capital into Latin America. We look at how Latin America has fared over the past year and what we can expect in 2021.

Near-catastrophic Covid impact

The Coronavirus headlines from Latin America have been worrying, with much blame being laid at the feet of leaders like Brazil's President Jair Bolsonaro, who has refused to acknowledge the risk and has recently indicated he will not take a vaccine once one becomes available. In an editorial in the Lancet in November stated: "the region as a whole is facing a humanitarian crisis borne out of political instability, corruption, social unrest, fragile health systems, and perhaps most importantly, longstanding and pervasive inequality—in income, health care, and education—which has been woven into the social and economic fabric of then region."

Brazil's 172,000 deaths from Covid-19 have been one of the highest in the world, second only to the United States. Mexico is seeing a second wave that is causing the WHO to reenforce its guidance, urging both Mexico and Brazil to be "very serious" about addressing it. The economic fall-out has been near catastrophic, particularly in terms of unemployment and job loss. The IMF recently reported that GDP in Latin America and the Caribbean is expected to contract by 8.1% this year.

Its Regional Economic Outlook Forecast noted that this is "due to a large percentage of workers employed in jobs requiring close physical proximity, with fewer people in jobs where teleworking is feasible." Countries like Peru have seen a 40% contraction in the second quarter of the year. The IMF warned that unless the virus is contained in the region, more economic damage is likely.

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