This economic crisis is different from the ones we know so far.

Projections suggest that some companies will inevitably go bankrupt and unemployment will
rise amid a crisis classified as "the worst since the Great Depression of 1929."

However, most of the countries in the region have activated emergency plans, are negotiating
financial aid and using all available ammunition to face what is coming.

"There is a window of opportunity in the long term," says Daniel Titelman, director of the
Economic Development Division of the Economic Commission for Latin America and the
Caribbean (ECLAC).

1.

The main trading partners in the region are China and the United States. As these economies
are in serious trouble from the pandemic, Latin America will be hit head-on.

The economic collapse in the United States affects the entire region, but especially Mexico and
Central America through trade, but also with remittances.

And what happens in China is also felt immediately, because it is the most important partner
of many Latin American countries and one of the main buyers of raw materials.

2.

2-Fall in the prices of raw materials

The drop in the price of raw materials is affecting the coffers of many countries in the region.

Added to the fall in the prices of minerals -such as copper and iron- is the decrease in the price
of foods such as soybeans, corn, meats and cereals.

And the one that has stolen the spotlight so far this year is oil.

Not only because of the coronavirus effect, but because of the price war between the
countries of the Organization of the Petroleum Exporting Countries (OPEC) led by Saudi Arabia
and Russia.

The conflict caused the price of a barrel to drop to historic levels, reaching close to US $ 20 at
the end of March, the lowest in the last 18 years, directly affecting countries such as Colombia,
Venezuela, Ecuador and Mexico.

Projections point to a price recovery after the parties reached an agreement to reduce
production.

The fall in the price of raw materials causes less inflow of dollars from exports to the region
and puts the public coffers in check.

3.

3- The interruption of global production chains

"As the world is closed, there is a disruption of supply chains," explains Titelman.

The parts to make a product are made in different countries. Thus a chain is built between the
different companies that provide the components to those who assemble the final product.
When that is interrupted, many of the companies in a country are left without the possibility of
continuing to produce, because they do not have the inputs they need.

"The bulk of world trade is in inputs that companies sell to each other, rather than the final
goods that the consumer buys," says Titelman.

With the pandemic crisis, the countries most affected by the interruption of these chains are
Mexico and Brazil, whose manufacturing sectors are the largest in the region. For example, the
automotive sector in Mexico.

4.

4-Lower demand for tourist services

The lower demand - and in some cases the zero demand - for tourism services, is leaving
countries that depend on this activity without oxygen.

This is the case in several countries, such as Mexico, the Dominican Republic or Cuba.

5.

5-Capital flight and currency devaluation

Latin America was already in high levels of debt before the pandemic hit.

Now, countries' public debts have started to skyrocket as economic activity has come to a
standstill.

The recession that is shaking the world has caused historic stock market crashes and investors
panic.

"People get scared and seek refuge, taking their capital to safer places, like the US Treasury
Bonds," says Titelman.

As often happens in times of crisis, capital flight occurs because investors do not want to take
risks. And that is precisely what has been happening in the region.

"Capital is leaving Latin America as we have never seen before," adds the economist.

"When you need financing the most, it is leaving you."

The outflow of dollars has led to a gigantic devaluation of currencies so far this year, with
spectacular falls in the Brazilian real, the Mexican peso and the Colombian peso.

And since most of the public debt of Latin American countries is in dollars, the effect is very
negative.

Conclutions
It is not easy to find a positive effect amid the devastating economic consequences of the
pandemic.

However, Titelman says that "there is a window of opportunity in the long term."

This crisis, he explains, "will make the world rethink new models of development where the
role of the public sector will have to be greater than it had in the last 30 or 40 years."
This crisis caused by the pandemic has revealed the lack of social protection, the deterioration
of public health systems and inequality in the region.

"There will also come a greater questioning of the globalization model," says Titelman,
something that can promote positive changes in the sense of how we have been doing things.

Other economists also point out that while some companies will lose the battle amid the
chaos, others will capitalize on new business opportunities.

And at the level of the people, given that the crisis will cause important changes in the way we
work, shop, travel and live together, opportunities will also arise when the waters calm.

What we do not know is how long until the storm passes.