Since it was declared a pandemic, Coronavirus has rocked the pillars of the world. As of June 2020, it has posed a level #7 threat to business, meaning that severe and widespread economic impacts were likely. Indeed, from the most humble communities to the most developed countries, no society or economy left out unscathed.
As lockdown measures were applied in nearly all countries, it became expectable a major global recession. Along with disease mitigation policies, governments across the world have been committed to key economic responses in an attempt to contain the economy’s downturn, including safety nets and fiscal stimulus packages.
Quarantine, social distance and self-isolation have impacted, and continue to impact all economic sectors, and, of course, it has triggered a shift on the consumer’s behavior and consumption habits.
Nevertheless, mature and emerging markets have been adapting as fast as they can, and recovery is in near horizon: according to OCDE’s forecast, the real GDP is expected to increase from USD 99 million in 2019 to USD 103 million in 2020, USD 106 million in 2021, and UDS 109 million in 2022.
This is the situation worldwide, but what is happening in Latin America? To what extent did the effects of Covid-19 affect the region’s markets? And what concerns, expectations and behaviors do Latin American consumers express?
The Latin American scenario
For an already complex region such as Latin America, the impact of the policies and measures applied world widely to contain the spread of the disease has underlined challenges and revealed opportunities for the civil society, for companies, and for each country’s market.
As in the rest of the world, in LATAM all economic sectors have been affected, albeit to a different degree and extension. The most affected ones are trade, tourism, foodservice, transport and services. Mining, manufacture, construction, and finance have been moderated affected, while agriculture, forestry, and fishing are the least affected.
Regarding e-commerce, also in Latin America coronavirus outbreak has boosted the upward trend that is been registering for the last years now. E-commerce revenues have increased tremendously in markets such as Brazil (130%), Mexico (500%), Colombia (130%), and Peru (900%), and altogether the region e-commerce revenues growth rate amounts for 230%.
This growth it’s a direct consequence of the change in the consumer’s online behavior: Latin Americans are purchasing more online (78%), are using home banking and mobile apps to manage their finances, and are adopting cashless payments.
Challenges to address and Opportunities to grasp
Mortality of companies with higher costs and unemployment, along with high labour informality and increased precariousness of vulnerable groups are challenges to address in LATAM, as in the rest of the world.
In the other hand, this crisis has revealed itself as an opportunity for entrepreneurs to start businesses based on new, innovative paradigms, including those strictly online, and for companies to shift to labour-saving technologies and activities, to step into a digital finance ecosystem and to prioritize digital sales channels (including adopting alternative payment methods).
The Latin American consumer’s expectations
People have changed their mind-set and are adapting their lifestyles to new reality brought by the pandemic. Being a fragmented region where each country presents its own specificities, it’s natural that people have different expectations and fears regarding their countries’ pathway towards a post-Covid future.
But in general, nowadays, Latin Americans major concerns are related to Coronavirus, unemployment, healthcare, financial/political corruption, poverty and social inequality, crime and violence. Therefore, Latin Americans shifted their consumption habits to rest assured their worries are meet.
As a consequence, Latin Americans start purchasing more online (see above), and there were 29 million new online shoppers, that’s 126% more than the pre-Covid projected amount. And aside from essential goods, the new Latin American consumers are looking online for tools to work from home, for tools for emotional well-being and to maintaining a healthy lifestyle.
Partnering with BoaCompra towards LATAM’s economic recovery
In a delicate moment for the world economy, merchants can rely on our joint companies, BoaCompra and PagSeguro/PagBank, to continue to offer our vast experience and expertise on market behavior and industry trends.
Together we provide for financial technology solutions that enable companies to easily access emerging markets, including true, local payment methods – especially relevant nowadays, when digital sales channels have become crucial to every business.