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halved, and real growth was not expected until
2020.
However, the COVID-19 pandemic has
scuppered even these hopes. As of May,
the Brazilian government lowered its 2020
economic outlook, and predicted a contraction
of 4.7%, which would mark the country’s
largest economic decline since records began
in 1900. The Economy Ministry has stated
that it will likely be 2022 before the economy
recovers to levels seen in December 2019.
Whilst these figures seem bad enough, a
survey of economists carried out by the
country’s central bank forecast an even
deeper contraction of 6.5%. JP Morgan,
UPS, HSBC, and Goldman Sachs have all
predicted a contraction of 7% or even more.
Focus Economics predicts that the country
will return to growth in 2021 at a rate of 3.3%.
According to Economy Minster, Paulo Guedes,
Brazil has spent US$143 billion on various
support measures in response to the crisis
– more than any other developing economy
– saving some 10 million jobs. Additionally,
emergency aid for informal workers is being
extended for two months in order to allow
the country to prepare safety measures for
employees to return to work.
According to the World Bank, Brazil features
one of the lowest levels of infrastructure
investment (2.1% of GDP) in comparison to
its peers, and the quality of these investments
is low. In 2019, Brazil consumed 54 million t
of cement, a 2 million t improvement on 2018,
but sales are expected to decline significantly
this year as much construction work is
postponed or cancelled.
Argentina has also been facing economic
difficulties in recent years. Despite a GDP
of US$450 billion, one of the largest in
Latin America, the country has faced ongoing
issues of low domestic demand weighing
down economy activity. Worst of all, the
country is struggling to make interest payments
(approximately US$500 million) on its sovereign
debt of US$324 billion. On 22 May, the country
defaulted on its debts for the second time since
2000 and the ninth time in the country’s history,
after failing to negotiate the restructuring of a
US$66 billion portion of the overall debt. And,
as with the rest of the world, the pandemic
is only set to make things more complicated.
Focus Economics predict that the country’s
economy will decline by 6.9% in 2020. Whilst
an initial rebound to 3.5% growth is expected
in 2021, the long-term issues caused by debt
default are likely to weigh on the economy for a
significant period.
As of April this year, cement production
in Argentina had fallen by 35% in the wake
of reduced demand and the suspension of
operations by major regional players, such as
Cementos Molins.
Colombia is another of South America’s
major economies. Prior to the pandemic,
the country was the fastest growing in the
region, recording growth of 3.4% in 2019.
A history of sensible economic policies has
seen the country previously deal relatively
well with intermittent bouts of political and
social disruption. President Iván Duque was
recently interviewed by the
Financial Times
where he highlighted the recent, successful
issuance of US$2.5 billion in sovereign
bonds and referred to this as proof of
“confidence in Colombia and confidence in
our macroeconomic policy.” The President’s
popularity has risen in recent months due to
what has been regarded as a swift response
to the pandemic, which has thus far inflicted a
relatively low toll of 1100 deaths and 33 000
infections, giving the country a much lower
per-capita death rate than other nations in
the region, such as: Brazil, Chile, Ecuador,
and Peru. The President referred to these
statistics as “grounds for optimism, but not
triumphalism” and acknowledged that whilst
the region would be hard hit by the pandemic,
it was also likely to bounce back faster than
other areas.
Colombia’s Finance Minister,
Alberto Carrasquilla, revealed that the
government was predicting a contraction in
GDP of 5.5% for 2020, but was quick to note
that “We think that in 2021 this economy will
grow at least 5% […] I do think we will have
a quick recovery. We have businesses in
Colombia that are ready to act.” The country’s
quarantine is gradually being relaxed, with
many sectors slowly returning to business,
but lockdown measures are not currently due
to be fully lifted until 1 July. Unemployment
peaked in April at 23.5%.
Project round up
Brazil
Cuiaba, Votorantim Cimentos
FCT Combustion delivered a Turbu-Flex
burner to Votorantim Cimentos’ Cuiaba plant
in Brazil in February 2020. The new burner will
operate using petcoke and fuel oil as well as
coprocessing alternative fuels including rice
husks and wood shavings.
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World Cement
World Review 2020