Seasons Change

President Obama’s visit to Havana is not the only novelty in Latin America these days. The winds of change blow in many directions at the same time. Different regimes show increasing signs of wear and tear. Finances fall apart and government corruption surfaces. Economics finally prevail over ideologies. The end of a long widespread political cycle looks to be imminent.

Argentina is one classic example. Gone into default in the early 2000s, it has seen circumstances only aggravate since. The country became a sovereign debt record holder and was eventually considered an international financial outcast. Seemingly endless trouble tormented the current 21st economy in the world.

Then the election of opposition’s liberal candidate, former Buenos Aires mayor Maurício Macri, started producing results even before any real action could be taken. Stock exchange went up 40% and yields on government bonds fell sharply. Optimism instantly took over despite the huge challenges lying ahead of the new president.

The market which had grown used to the manipulation of foreign exchange and inflation rates, nationalization of private assets and the like, now clearly welcomes the ascension of a business friendly leader. Foreign investors evidently favor Macri’s rise to power and the envisaged devaluation of local currency. Substantial changes are not expected any time sooner than next year. But then if successful Argentina is to grow some sound 5% by 2019.

Brazil is three times as large, five times as populated and four times as rich as Argentina. Nevertheless it has equally endured severe public mismanagement. Odds of the current Brazilian administration not going full term, by means of an eventual impeachment or abrogation, are enough to make experts foresee a speedy recovery thereon.

Strikingly no less than 235,000 companies were established in the State of São Paulo even in the midst of crisis in 2015. Segments like cellulose, pharmaceuticals and agribusiness keep performing well nationwide. Yet Brazil remains hungry for infrastructure – perhaps up to 600 billion dollars worth of investments, another display of great potential.

These are hard times for sure, but they may be the necessary rupture with past mistakes, introducing a new era of rationalism, moderation and consistency. Many reforms and amendments remain to be made. They will cost and they will take time, but there is indeed a future to look for. For some eager observers, that future has already begun.