LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Tuesday, November 26, 2019 BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group ECONOMIC Devry Boughner Vorwerk What Does a Close Mexico Falls Into CEO, DevryBV Sustainable Strategies Recession Amid Joyce Chang Global Head of Research, Presidential Vote Stagnant Growth JPMorgan Chase & Co. Latin America’s second-largest Paula Cifuentes economy fell into a recession in Director of Economic & Fiscal Affairs, Mean for Uruguay? the first half of the year, according Latin America & Canada, Philip Morris International to revised official statistics. The Marlene Fernández country saw no growth in the third Corporate Vice President for quarter. President Andrés Manuel Government Relations, López Obrador had promised 2 Arcos Dorados percent growth for 2019 when he Peter Hakim took office nearly a year ago. President Emeritus, Inter-American Dialogue Page 2 Donna Hrinak President, Boeing Latin America BUSINESS Jon E. Huenemann Former Corporate and Ecopetrol Plans Government Senior Executive Investments of as James R. Jones Chairman, Luis Lacalle Pou of the right-of-center National Party (or Blancos) is leading in the vote count Much as $5.5 Bn Monarch Global Strategies in Uruguay’s presidential runoff. // File Photo: Lacalle Pou Campaign. The Colombian state-owned oil Craig A. Kelly company plans to increase its Director, Americas International Former Senator Luis Lacalle Pou appeared to have edged Gov’t Relations, Exxon Mobil capital expenditures, spending the John Maisto out his rival, former Montevideo Mayor Daniel Martínez, bulk on upstream activities. Director, U.S. Education in Sunday’s presidential election in Uruguay. Martínez has Page 2 Finance Group Q not conceded. A victory by Lacalle Pou, a conservative and Nicolás Mariscal Chairman, the son of a former president, would put an end to 15 years of rule by POLITICAL Grupo Marhnos the leftist Broad Front coalition. What are the biggest takeaways from Thomas F. McLarty III Peru Tribunal Chairman, Uruguay’s election? What challenges will the eventual winner need to Frees Opposition’s McLarty Associates address first as Uruguay’s next president? What will the closer-than-ex- Carlos Paz-Soldan Keiko Fujimori pected election result mean for the next president’s ability to govern and Partner, Peru’s Constitutional Tribunal DTB Associates, LLP set his own agenda? freed opposition leader Keiko Beatrice Rangel Fujimori. She was jailed more than Director, a year ago amid an investigation AMLA Consulting LLC David Nelson, CEO of Global Business Policy and former Jaana Remes into corruption allegations that Partner, U.S. ambassador to Uruguay: “Although the final results may she denies. McKinsey Global Institute not be available before Friday, Martínez would need to win 90 Page 2 Ernesto Revilla Head of Latin American percent of the ballots left to count, but those are mostly from Economics, Citi A the interior of the country where Lacalle dominated. So it seems highly Gustavo Roosen Chairman of the Board, likely there will be a transition to the ‘traditional’ parties after 15 years of Envases Venezolanos rule by the Frente Amplio. The close vote probably ensures that Lacalle Andrés Rozental will seek to unite the country, rather than pursue policies that would imply President, Rozental & Asociados a ‘domination’ by the right. The non-Frente Amplio parties have a majority Shelly Shetty in Congress, but they are fragmented so it will be a challenge for Lacalle Head of Sovereign Ratings, Latin America, Fitch to maintain his coalition to pass laws—particularly with the new hard- Roberto Sifon-Arevalo right party led by General Manini Ríos. It may be time for Uruguayans to Managing Director, Americas Sovereign & Public Finance Ratings, recognize a sea change in their traditional political structure—for many Standard & Poor’s years the dominant parties, the Colorados and Blancos, were in fact each coalitions with diverse ideologies. Once again, Uruguay now has two ma- Fujimori // File Photo: TV Perú. Continued on page 3 COPYRIGHT © 2019, INTER-AMERICAN DIALOGUE PAGE 1 LATIN AMERICA ADVISOR Tuesday, November 26, 2019 ECONOMIC NEWS corruption, the Associated Press reported. NEWS BRIEFS The ruling does not constitute a judgment of Mexico Falls Into Fujimori’s guilt related to accusations that she Final Results of Uruguay accepted bribes from Brazilian construction Presidential Election Recession as giant Odebrecht. Prosecutors are investigating accusations that Fujimori, the daughter of Expected Later in Week Growth Stagnates imprisoned former president Alberto Fujimori, Uruguayan electoral authorities are expecting laundered money from Odebrecht to finance to announce the final results of the country’s Mexico’s economy fell into a recession in the her 2011 and 2016 presidential election presidential election later this week, after first half of the year and saw no growth in campaigns, allegations that she denies. She they count some 34,000 “observed” ballots— the third quarter, according to revised data was jailed more than a year ago, while she votes from people who could not get to their released Monday, Agence France-Presse was leading the opposition in Peru’s Congress. assigned polling stations in Sunday’s election, reported. In the first and second quarters, Analysts say Fujimori’s release will strengthen MercoPress reported Monday. Conservative Mexico’s economy contracted by 0.1 percent her Popular Force party for the 2020 parliamen- Luis Lacalle Pou leads leftist Daniel Martínez and experienced zero growth in the third, tary elections scheduled Jan. 26, El Comercio by approximately 29,000 votes. according to national statistics institute INEGI. reported today. “I think that having a visible Preliminary figures had reported earlier that leader who articulates the candidates will help Latin America’s second-largest economy had them a lot in the campaign,” political scientist contracted 0.2 percent in the first quarter, grew María Alejandra Campos told the newspaper. Colombian Teen Dies 0.1 percent in the second and grew 0.1 percent Hundreds of people took to the streets Monday After Being Struck by in the third. In this year’s third quarter, the evening to protest Fujimori’s release, clashing Projectile During Protest economy contracted 0.2 percent as compared with riot police, Bloomberg TicToc reported A Colombian teenager who took part in a to the same quarter last year, according to via Twitter. The rally was organized mainly by protest march last week to demand better the statistics institute’s revised data. The youth through social media with the hashtags access to education has died after being hit data came as bad news for President Andrés #TomaLaCalle and #FujimoriNuncaMas, on the head by a projectile fired by riot police, Manuel López Obrador who on Sunday marks according to the report. All of the former BBC News reported. Outrage over the death of one year in office. He had promised to deliver presidents of Peru still living are currently in Dilan Cruz has sparked calls for fresh marches economic growth of 2 percent this year and 4 prison or under investigation for corruption or by protesters who object to the heavy-handed percent across his six-year term. Mexico’s cen- other misdeeds. [Editor’s note: See related Q&A police response to marches that started last tral bank on Monday reported a larger-than-ex- in the Nov. 19 issue of the Advisor.] Thursday. President Iván Duque said he deeply pected current account surplus of $2.01 billion regretted Cruz’s death. He plans to meet with for the third quarter, Reuters reported. The third leaders of the protests later today. quarter’s figure was driven by a record high BUSINESS NEWS non-oil trade balance surplus and a robust 8 percent increase in workers’ remittances, Gold- man Sachs analysts Alberto Ramos told clients Ecopetrol Planning Ericsson to Invest in a research note. as Much as $5.5 Bn $238 Million in Brazil for in Investment 5G Tech Assembly Line POLITICAL NEWS Swedish telecoms equipment maker Ericsson Colombian state-owned oil company Ecopetrol plans to invest 1 billion reais ($238 million) in said Monday that its 2020 investment plan will Brazil to add a new assembly line dedicated to Peru Tribunal Frees increase capital expenditures to between $4.5 5G cellular technology for export to other Latin Keiko Fujimori After billion and $5.5 billion, up from the $3.5 billion American countries, an executive told Reuters to $4 billion in 2019 forecast at the start of on Monday. Brazilian telecoms regulator Anatel More Than a Year the year, S&P Platts reported. The new figures is still determining the rules for its highly antic- are 25 percent to 53 percent higher than the ipated 5G spectrum auction, which was initially Peru’s Constitutional Tribunal on Monday estimated figure for organic investment this scheduled for next March but later postponed approved a habeas corpus request to free op- year. Eighty percent of investments will be con- as tests on interference with other services are position leader Keiko Fujimori from preliminary centrated on upstream activities, the company still ongoing, according to the report. [Editor’s detention while she is investigated for alleged said in a statement. Ecopetrol said the com- note: See a webcast of the Dialogue’s event on 5G in Latin America.] COPYRIGHT © 2019, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Tuesday, November 26, 2019 pany would generate net positive earnings at FEATURED Q&A / Continued from page 1 approximately $30 per barrel of oil, with plans to organically produce at least 750,000 barrels jor political coalitions—with the Blancos and The new government will carry out audits, of oil-equivalent per day in 2020. The company Colorados united as one facing the Frente mainly regarding Venezuelan business relat- added it will invest more than $150 million Amplio.