Global Economy, Competitiveness, Government Policy, Economic Environment, Recession
Brazil’s economy and manufacturing are in a technical recession, inflation is higher than desirable, and public finances are deteriorating. The country’s short-term outlook appears depressing, as the ongoing macroeconomic imbalances will have to be addressed by orthodox policies, which will in turn bring muted growth and rising unemployment.
Global Economy, Economic Environment, Recession, Money & Finance, Government Finance
Facing insolvency, the Argentine government defaulted on its roughly $130 billion of foreign debt in late 2001 following a four-year economic recession. Once the economy recovered, Argentina offered holders of defaulted bonds new debt instruments via sovereign restructurings in 2005 and 2010. In order to reach elevated acceptance levels, the new bonds were governed mostly under foreign law (some in Europe and some in New York) and included a “rights upon future offers” clause—giving bondholders the possibility to participate in any eventual voluntary restructuring offering better terms. As a result, 93% of the holders of defaulted debt accepted the restructurings. The remaining 7% (the “holdouts”) have been seeking payment in full via legal venues, with some turning to the U.S. courts.
Global Economy, Competitiveness, Government Policy, Economic Environment, Energy
Over the next few years, five structural developments will dominate the scene in Latin America and will have definite impacts on U.S. manufacturing companies doing business there. Three relate to large energy projects that will both demand manufactured goods and lower manufacturing costs, stimulating production and economic growth. In Brazil, the 2014 World Cup and 2016 Olympics are triggering opportunities across manufacturing sectors. Finally, Mexico’s politicians are attempting to tackle the lack of competitiveness of their economy, an effort with benefits for the nation’s export-oriented industrial sector.