The 2021 Latin America Forecasting Forum by Americas Market Intelligence

2021 LatAm Forecasting Forum
www.americasmi.com September 24th, 2020

2021 Latin America
Forecasting Forum
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live broadcast of the 2021 Latin America Forecasting Forum on September
24, 2020.
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2021 Latin America Forecasting Forum
Introductions
2021 Latin America
Forecasting Forum
Today’s panelists
John Price Ricardo Alvarez Lindsay Lehr Diego Rodríguez Guillaume Corpart Arthur Deakin
AMI Managing Director Consumer Services Payments Practice Logistics Practice Director Healthcare Practice Energy Practice Co-director
Practice Director Director Director
And moderated by Abel Delgado

AMI Digital Marketing Director
4
©2020. All rights reserved. ǀ Private and Confidential www.americasmi.com 4
2021 Latin America
Forecasting Forum
Our market intelligence & advisory services help
clients make decisions and take actions
CUSTOMER • Decide where to cut costs

(Market research) • Decide which products, channels and markets to defund
• Develop a market entry strategy
• Decide whether to and how to acquire a company
• Find, evaluate and choose a local business partner
• Adapt a product or service to the local market
COMPETITOR • Decide upon which markets to focus marketing spend
(Competitive intelligence)
• Build a new strategic plan and local management buy-in
• Defend a company’s market share
• Disrupt the competition and win share
• Improve brand awareness and conversion
CONTEXT • Identify and mitigate political, community, and other
(Risk analysis) sources of project risk
• Understand the reputational risk of a partner or project
• Measure and improve customer satisfaction
2021 Latin America
Forecasting Forum
Customized forecasting presentations to accompany
your corporate planning meetings
Industry trend & opportunity Better-informed decision

Forecasting
analysis making
• Relevant global and regional Demand drivers
trends
Areas of opportunity
• Analysis by leading LAC market
Areas of risk
- Predicting end of COVID
health crisis Disrupted forever vs. a return
to the old ways
- Forecasting GDP,
consumption, F/X, etc.
- Forecasting full economic
+ =
recovery
- Predicting political risk ahead
- Identifying quick rebound
versus slow rebound
industries

2021 Latin America
Forecasting Forum
Poll question #1: By what % will your Latin American business
grow in 2021 vs. 2020?
30%
27%
25% 24%
20%
18%
15%
10% 9% 9%
5% 4% 4% 4%
0%
-20% -10% 0-9% 1-5% 6-10% 11-20% 21-30% >30%

Predicting the end

of COVID-19 in Latin
America
2021 Latin America
Forecasting Forum COVID-19 national response capacities fall into four camps
Latin American policy makers were forced to choose between saving lives vs saving the economy
Group 1 – Small island nations

• Ability to quick shut borders
• Strong sense of unity when threatened from abroad = compliance
Group 2 – Containment success

• Quick, decisive and pragmatic health policy execution
• Compliant population, universal healthcare
Group 3 – Past the point of return

• Slow political response to health crisis or urban density defied containment.
• Unable to sustain lockdowns due to informal economy.
Group 4 – Compliant but under-resourced

• Acted quickly to contain the virus. One point of entry for Europe flights.
• Informal economies limit duration of lockdowns.
• Race against time in hold-out for vaccines.
Insufficient or unreliable data Source – AMI analysis

2021 Latin America
Forecasting Forum Much of LatAm will reach DBP* before vaccines are deployed
Smaller countries generally fared better at slowing the spread of COVID
*Disease Breaking Point
2020 2021 2022

Nov Dec Jan Feb Mar Apr May Jun.. Sep.. Dec Jan Feb.. Jun
Argentina
Brazil
Chile Estimated vaccine
deployment date range
Colombia
Dominican Rep.
Ecuador
Guatemala
Mexico
Panama
Peru
Sources – ECDC, CDC, WHO, AMI analysis

2021 Latin America
Forecasting Forum
The race for a workable vaccine
176 vaccine initiatives are underway in more than a dozen countries.
2020 2021
Phase/Month Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Phase III trials
Approvals
Pilot manufacturing
Tier I countries deployment
Tier II countries deployment
Tier III countries deployment
Sources – FT, BCG, NY Times, AMI analysis

2021 Latin America
Forecasting Forum
Global monetary & fiscal policy response is astounding but uneven
$8 trn USD was added by the top nine central banks. LatAm has captured barely a trickle of this money.
Leading Central Bank M2 Supply (Jan-July ‘20) USD trillions
$80.0
$70.0
$60.0
$50.0
$40.0
$30.0
$20.0
$10.0
$-
December, 2019 August, 2020
China US EU JPN UK KOR AUS CAN CHK
Sources – CEIC data, AMI analysis

2021 Latin America
Forecasting Forum
How disrupted by regulations is life today in Latin America
All countries have begun loosening restrictions on economic activity and social mobility. Education and travel remain
highly restricted except in tourism dependent economies where efforts are being made to welcome visitors
Degree of normalcy
70%
60%
50%
40%
30%
20%
10%
0%
Argentina Guatemala Chile Ecuador Colombia Dom Rep Peru Brazil Mexico
Economic Social Education Int'l Travel
Sources – Council of the Americas, AMI analysis

2021 Forecast
2021 Latin America Latin America will take longer than other regions to return to
Forecasting Forum
2019 GDP levels
GDP size
returns
to 2019 Forecast global regional GDP growth 2020-2021
level
Q2, 2023 Q4, 2021 Q2, 2022 Q4, 2020 Q2, 2022 Q2, 2022 Q4, 2022
11
5 5
4 4 4
3
2
-3.5 -3.5
-7
-8.5 -8
-10
Latin America USA EU China South Asia Africa Middle East
2020 2021
Sources: World Bank, IMF, AMI analysis

15
2021 Latin America
Forecasting Forum In 2020, real GDP will drop 8.5% but in USD, LAC GDP will drop 20%
LAC major markets GDP (USD billions)

End of Year F/X 2019 2020 2021 2022
Brazil Mexico Argentina Colombia Chile Peru Ecuador Central America Caribbean
Argentina (official) 59.8 80 109 137
$6,000
Brazil 4.03 5.50 5.20 5.22
$5,000 Chile 744 795 780 775
Colombia 3295 3743 3681 3745

$4,000
Dominican Rep 52.9 59.0 59.4 60.2
$3,000 Guatemala 7.70 7.77 8.04 8.14
Mexico 18.85 22.5 22.15 23.05

$2,000 Peru 3.31 3.45 3.49 3.52
Trinidad & Tobago 6.77 7.00 7.50 7.50

$1,000
Uruguay 37.4 44 45.6 47.3

$0
2016 2017 2018 2019 2020 2021 2022 Venezuela 46.7k 2.15M 8.3M 22M
Source – Latin Monitor, AMI analysis

2021 Latin America
Forecasting Forum
Poll question #2: Which leading economy in Latin America will
be the first to recover to 2019 levels?
Which leading economy in Latin America will be the first to recover to 2019 levels?
30%
25% 24%
20%
18% 18%
15%
10%
10%
8% 8%
6% 6%
5%
2%
0%
0%
Argentina Brazil Chile Colombia Dominican Ecuador Guatemala Mexico Panama Peru
Republic

2021 Latin America
Forecasting Forum In Latin America, lockdowns were the only option, but a costly one
Real GDP Forecast 2020-2021 (%)

2020 2021 9
4.5 5
4 3.5 3.5 4 3.5 4
3
-3.5
-6.5 -6.5 -6 -6.5

-8.5 -8.5
-10.5
GDP size -11.5 -12
returns to USA Brazil Mexico Colombia Argentina Chile Peru Dom Rep Ecuador Guatemala
2019 level
Q4, ‘21 Q1, ‘23 Q2, ‘23 Q2, ‘23 Q1, ‘24 Q3, ‘22 Q3, ‘22 Q1, ‘23 Q4, ‘22 Q2, ‘22
Sources: World Bank, IMF, AMI analysis

2021 Latin America
Forecasting Forum Political risks ahead in the region’s major markets Regional risks:
• Security
• Taxes
• Populism
AMLO’s approval/disapproval ratings went from 78/18% (Mar/’19) to 56/41% (Ago/’20). Morena party grip on
Mexico congress may weaken to a minority after mid-term elections in 2021 as all major parties lose support and
fragmentation occurs. Pork barrel politics will worsen but greater pragmatism will underpin law making.
Strict lockdowns combined with minimal fiscal support to small business and the unemployed has worsened income distribution.
Colombia An unpopular President and distrusted Congress further erodes public support for government. Expect more disruptive protests
in late 2020 and early 2021, which could interrupt business and enliven populist politics in Colombia.
President Martin, the country’s most popular politician, nonetheless faces his 2nd impeachment hearing in 2020. General
Peru elections in April ‘21 will likely produce continued power fragmentation. Politics will remain dysfunctional for a while.
A constitutional referendum vote in October ‘20 begins a painful two-year process to re-write the constitution, quite likely
Chile written by a body consisting of 50% non-politicians, an unprecedented experiment. Some argue that Chile’s social ills cannot be
fixed constitutionally and reforming the respected document will put investors at risk for two years, possibly longer.
Bolsonaro’s bungling of the COVID health crisis and attempts to intervene in the prosecution of corruption cases has led to the
resignation of some of his most esteemed appointees, including Judge Moro, who will likely run in 2022. Investor hopes of a
Brazil strong reform agenda are slipping as Paulo Guedes loses leverage to the establishment parties and the return of pork barrel
politics.
On November 3rd, Trump is expected to win more votes at the ballot box. By November 9th, the addition of mail-in ballots will
USA likely lead to a Joe Biden victory. The resulting confusion and possible manipulation could lead to a protracted, Supreme Court
decision, that will rattle markets and drain risk capital from emerging markets like Latin America.
Sources: Latin America Risk Report, CNN, NY Times, Latin Finance, AMI analysis
2021 Latin America
Forecasting Forum LAC leading market forecast data
Data point / Country Units BRA MEX COL ARG CHI PER DR ECU GUA
2020 GDP (USD) USD bn 1,438 991 277 324 249 204 79.6 101.4 83.6
2021 GDP (USD) USD bn 1,605 1,050 298 350 267 219 81.3 105.2 85.5
2020 GDP growth (USD) % -21.8 -21.2 -14.5 -10.5 -11.7 -11.3 -10.5 -5.6 -0.3
2021 GDP growth (USD) % 11.7 5.9 7.5 8.0 7.2 7.4 2.1 3.7 2.3
2021 F/X Average / USD 5.35 22.58 3,679 88.9 795 3.47 59.4 1.00 8.0
2021 Inflation % 2.6 3.5 2.9 42.7 3.0 2.0 2.5 0.9 3.9
2020 Import growth % -11.8 -16.9 -8.2 -13.2 -13.4 -14.4 -7.4 -20.9 -5.4
2021 Import growth % 7.4 10.5 4.4 21.2 6.6 10.6 4.9 4.4 6.8
2021 External debt / GDP % 37.8 55.2 51.1 83.3 49.8 44.3 59.3 57.9 24.2
Source –Fitch, AMI analysis

2021 Latin America
Forecasting Forum
The sectoral disruption of COVID-19
Some sectors have benefited from the disruption of COVID-19, many have suffered
Manufacturing Financial Services

(Non-essential) Medical supply and
services
Education
Construction &
Real Estate
Oil & Gas
Automotive Potential Potential Food processing

losers Winners & Retail
Agriculture Personal &

Aviation & Healthcare
Maritime
Tourism & E-commerce ICT Source – McKinsey

Leisure

2021 Latin America
Forecasting Forum
COVID’s corporate winners are not prominent in Latin America
IT, E-commerce, Healthcare, Communications sectors originate outside of the region
Big tech companies lead stock market winners 2019 top 100 LatAm Companies by sector
Companies with net market cap gain of more than $1bn in 2020, by sector. Circle size shows
market cap added YTD’ (mid-June 2020), top 100 highlighted, top 25 labelled
Energy
Retail
Mining & metals
Automotive
Agrifood
CPG
Telecom
IT
Paper
Media
Healthcare
Airlines
0 10 20 30 40
Source – America Economia, Forbes, AMI analysis

Intermittence Q&A
Leading disruptive
COVID-19 trends
Analysis & discussion
2021 Latin America
Forecasting Forum
Trend #1 - The fiscal cost of COVID lockdowns is alarming
Fiscal deficits across LatAm will balloon in 2020 as VAT revenue plummets and fiscal spending increases
Forecasted Fiscal Balances 2020-2021 (% of GDP)
Source(s): AMI Analysis, World Bank, IMF, CEPAL, S & P Global

2019 2020 2021
0
-2 -1.4
-1.6
-2.5 -2.3 -2.1
-4 -2.7 -2.8
-3.8
-6
-5.9 -5.8 -6.2
-8 -6.7 -7
-7.6
-8.1
-10 -8.9
-9.5
-12
-14
-16 -14.9
Brazil Mexico Colombia Argentina Chile Peru Dom Rep Ecuador Guatemala
Sources: WHO, CDC, ECDC, AMI analysis

2021 Latin America
Forecasting Forum
Trend #2 - The worsening of Latin America’s income gap
GDP growth from fiscal Informal Vulnerability to income gap

stimulus employment widening
Argentina 49% High
Mexico 58% High
Colombia 62% High
Chile 28% Low
Peru 73% Medium
Brazil 42% Low
0.0% 2.0% 4.0% 6.0% 8.0% 100%

Source – Council of the Americas, OECD, CEPAL, AMI analysis

2021 Latin America
Forecast Forum
Trend #3 - The acceleration of e-commerce usage
LatAm e-commerce sales (USD bn)

$200
$180
$49
$160
LatAm E-comm
$140 $40
share of retail
$120 $31
$28
2.5% 2016 $100 $31
$24
$80
$18 $143
4.3% 2020 $60 $12 $122
$102
$92
$40 $74 $82
$52 $59
5.5% 2023 $20
$-
2016 2017 2018 2019 2020 2021 2022 2023
Domestic Cross-border
Sources – AMI e-commerce report

27
2021 Latin America
Forecast Forum
Trend #3 – More people using e-commerce for the first time
Segment
12 12 Brazil Mexico Colombia
Retreaters - reducing their
online purchases.
9 11 21
12
Maintainers – have not changed
their on-line purchase behavior 38 28 24
32
Adapters – are purchasing

31 slightly more online 33 32 23
Disruptors – are purchasing
significantly more online 18 11 11
Retreaters Maintainers Adapters
Disruptors Newbies Newbies – made a new online
purchase for the first time 3 17 21
Source: AMI/Echo survey, N = 2,078
28
2021 Latin America
Forecast Forum Trend #4 – The digitization of everything
• LatAm TV viewership has grown 14% during COVID, but digital

medium viewership has grown 40%
• Rappi partnered with Jumio to add an AI-solution to the

onboarding of customers & couriers and lower fraud
• Falabella to close four stores in Argentina and may leave the

country
• Marketplaces are now emerging within specific industries (e.g.

Iguanafix in home improvement) as the explosion of digital
commerce seeks order and efficiency
29
2021 Latin America
Forecast Forum Trend #5 – Novel ways of segmentation
Digital marketing permits hyper-personalization, quarantines warrant an emotional segmentation approach
41 27 18 14
Feeling stronger/redefined Finding a “silver Philosophic Irritated &
lining” al Scared
Job and/or income loss combined
with isolation and reflection has Valuing friends/family Cool headed Worried/frustrated
obliged or inspired them to assess more, each (sanguine), about their health,
who they really are, how to start experience, want to wait and see income, and
anew and define their future live life to the max attitude quarantine orders
Irritated & scared

• COVID has altered
Philosphical
consumer behavior and
created a new generation
I am 6 Finding a "Silver Lining"
of online buyers.
purchasing Feeling stronger/Redefined
12 • The “Redefined” are led by
more online
women, many of whom are
due to 33
single mothers and run
COVID-19 49
their own business.
Source – AMI/Echo Survey & Analysis
30
2021 Latin America
Forecasting Forum The Opportunities & Risks of COVID-19’s most disruptive trends
Disruptive Trend Opportunities Risks
• Government as a client will become more price sensitive,

• Privatize remaining ‘sacred cow’ state assets in energy
cancel contracts
sector.
Fiscal collapse • Political pressure to bring more efficiency and
• Governments will search to raise taxes on ‘successful’
industries: gold & silver mining, digital commerce,
transparency to procurement & disbursements
agriculture exports.
• Products destined to the middle class will need to be re-

• Affluent share of wealth to grow – financial services,
priced and re-positioned.
Widening income gap private security, international education
• Some governments will implement price controls, stifling
new investment.
• >50 million new digital commerce customers forced online • Specialty (brick and mortar) retails may struggle to
Accelerating e-commerce by quarantines survive.
adoption and sales • Expanded opportunities for fulfillment services, payments • Governments will target e-commerce for taxation,
solutions, digital services & products including cross-border transactions.
• Accelerated adoption of digital solution spurs new demand

• Analogue industries will mothball more quickly, causing
Digitization of everything and raises productivity and wealth creation
bankruptcies and disruption
• Easier market penetration for foreign suppliers
• Hyper-personalization can raise margins by optimizing

• Consumer data privacy may be inadequately protected in
Novel segmentation marketing costs.
some jurisdictions
• Emotional segmentation will help sell new digital solutions

2021 Latin America
Forecasting Forum
Your follow-up questions are welcome
John Price Ricardo Alvarez Lindsay Lehr Diego Rodríguez Guillaume Corpart Arthur Deakin
AMI Managing Director Consumer Services Payments Practice Logistics Practice Director Healthcare Practice Energy Practice Co-director
Practice Director Director Director
jprice@americasmi.com ralvarez@americasmi.com llehr@americasmi.com drodriguez@americasmi.com gc@americasmi.com adeakin@americasmi.com
And moderated by Abel Delgado

AMI Digital Marketing Director
adelgado@americasmi.com
32

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2021 LatAm Forecasting Forum

www.americasmi.com September 24th, 2020

Whenever possible, AMI has verified the accuracy of the information

©2020 Americas Market©2020

And moderated by Abel Delgado

CUSTOMER • Decide where to cut costs

Industry trend & opportunity Better-informed decision

©2020. All rights reserved. ǀ Private and Confidential www.americasmi.com 6

©2020. All rights reserved. ǀ Private and Confidential www.americasmi.com 7

Predicting the end

Group 1 – Small island nations

Group 2 – Containment success

Group 3 – Past the point of return

Group 4 – Compliant but under-resourced

Insufficient or unreliable data Source – AMI analysis

©2020. All rights reserved. ǀ Private and Confidential www.americasmi.com 9

*Disease Breaking Point

2020 2021 2022

Sources – ECDC, CDC, WHO, AMI analysis

Phase III trials

Tier I countries deployment

Tier II countries deployment

Tier III countries deployment

Sources – FT, BCG, NY Times, AMI analysis

Leading Central Bank M2 Supply (Jan-July ‘20) USD trillions

China US EU JPN UK KOR AUS CAN CHK

Sources – CEIC data, AMI analysis

Economic Social Education Int'l Travel

Sources – Council of the Americas, AMI analysis

Sources: World Bank, IMF, AMI analysis

LAC major markets GDP (USD billions)

$5,000 Chile 744 795 780 775

Colombia 3295 3743 3681 3745

$3,000 Guatemala 7.70 7.77 8.04 8.14

Mexico 18.85 22.5 22.15 23.05

Trinidad & Tobago 6.77 7.00 7.50 7.50

Uruguay 37.4 44 45.6 47.3

Source – Latin Monitor, AMI analysis

©2020. All rights reserved. ǀ Private and Confidential www.americasmi.com 17

Real GDP Forecast 2020-2021 (%)

-6.5 -6.5 -6 -6.5

Sources: World Bank, IMF, AMI analysis

Source –Fitch, AMI analysis

©2020. All rights reserved. ǀ Private and Confidential www.americasmi.com 20

Manufacturing Financial Services

Oil & Gas

Automotive Potential Potential Food processing

Agriculture Personal &

Tourism & E-commerce ICT Source – McKinsey

©2020. All rights reserved. ǀ Private and Confidential www.americasmi.com 21

Source – America Economia, Forbes, AMI analysis

Forecasted Fiscal Balances 2020-2021 (% of GDP)

Source(s): AMI Analysis, World Bank, IMF, CEPAL, S & P Global

Sources: WHO, CDC, ECDC, AMI analysis

GDP growth from fiscal Informal Vulnerability to income gap

Argentina 49% High

Mexico 58% High

Colombia 62% High

Chile 28% Low

Peru 73% Medium

Brazil 42% Low

0.0% 2.0% 4.0% 6.0% 8.0% 100%

©2020. All rights reserved. ǀ Private and Confidential www.americasmi.com 26

LatAm e-commerce sales (USD bn)