The world is eager to put 2020 behind us, especially as many successful coronavirus vaccine candidates have reached final approval stages. Despite resurgences of COVID-19 in regions around the world, major economies continue to show expansion and growth into the New Year.

The ripple effects of the pandemic will be felt for many months and even years – yes, years. But recovery is progressing, leaving analysts, business owners and manufacturers feeling optimistic about the future. Sign up for our monthly newsletter to stay up-to-date on the factors impacting international trading.

Brazil’s manufacturing PMI increased to 66.7 in October 2020 from 64.9 the previous month. This marks the fifth consecutive expansion in factory activity. Mexico, on the other hand, saw modest gains to its manufacturing PMI – from 42.1 to 43.6 – but is still in a state of contraction. October is the eighth consecutive month of contracting factory activity for Mexico.

Capacity utilization in Brazil increased to 79.4%, up from 78.1% the previous month, exceeding pre-pandemic figures. Mexico’s capacity utilization also improved to 75.5% (up from 71.7% the month prior), but remains below pre-pandemic levels.

Below is a chart showing import levels of key Latin American countries Mexico, Brazil and Chile. Imports month-over-month increased for all three countries but remain down year-over-year. Consumer demand for Chile and Mexico in particular is the major contributor to declining imports.

Recent economic news points towards mixed economic and manufacturing activity across key regional markets.

Brazil’s real led gains across Latin American currencies last month. The real added about 0.9% to the dollar as increased October tax revenues painted an encouraging picture of economic recovery. But the currency has widely underperformed its regional peers this year, due to record-low interest rates, rising coronavirus cases and concerns over surging government debt.

Mexico’s economy expanded at the fastest pace in at least three decades in the third quarter, making up for part of the output lost during the pandemic as manufacturing surged to meet strong U.S. demand.

Gross domestic product climbed 12% from the previous quarter, according to preliminary data released by the national statistics institute on Friday. The result, the best in data going back to 1990, was in line with the 11.9% median estimate from economists in a Bloomberg survey.

Brazil’s economy ministry last month lowered its budget deficit forecasts for this year, both in nominal terms and as a share of the economy, and reduced its end-year debt projections. The ministry said it now sees a central government primary deficit of 844.3 billion reais this year or 11.7% of gross domestic product, down from its previous forecast of 880.5 billion reais or 12.3% of GDP on October 30.

A U.S. administration led by president-elect Joseph Biden may promote constructive U.S. re-engagement with Latin America, although the near-term focus in both the U.S. and Latin American countries will remain on domestic issues, Fitch Ratings says. Notably, a new domestic stimulus bill would be positive for Latin American countries.

Leeco Trading’s Commercial Director – Antonio Rosset – was invited to speak on Thursday, Nov. 26 at a round table event hosted by the Brazilian Chamber of the Construction Industry (CBIC). Mr. Rosset spoke about purchasing and imports strategies for Brazilian manufacturers to an audience of small, medium and large construction and manufacturing leaders. Contact us today for a recap of Mr. Rosset’s presentation.

Antonio Rosset, Commercial Director