The head of the World Economic Forum's Latin America team warned Wednesday that the COVID-19 pandemic could devastate the region's economy if governments fail to act, but leaders from key industries are envisioning strong post-pandemic recoveries.
Marisol Argueta de Barillas, who leads the WEF's Latin America team and previously served as El Salvador's foreign minister, said the pandemic could have unprecedented effects on "unemployment, social conditions and poverty" in the region.
"Policies to protect household incomes and aggregate demand are essential," Argueta de Barillas said at an event hosted by the Woodrow Wilson International Center for Scholars. She added that these protections are especially pertinent considering "the high level of independent and informal workers in Latin America."
Due to the pandemic, the World Bank is projecting gross domestic product in Latin America will shrink 4.6 percent this year, ending several years of slow growth and exacerbating already-occurring economic crises in certain parts of the region.
Despite these negative economic projections, business leaders from major industries across the region, including food service, hospitality and travel, remain optimistic.
Woods Staton, executive chairman of Arcos Dorados, the master franchisee for McDonald's restaurants in Latin America, said 70 percent of the company's units are "functioning in one way or the other" during the pandemic. So far, Staton said, Arcos Dorados has not laid off any of its approximately 90,000 employees and pay cuts outside of the company's senior leadership have been minimal.
Staton said Arcos Dorados has not received any financial assistance from governments beyond tax deferrals, but noted the deferrals have been a "huge help."
He also said the company is well-positioned to bounce back after the pandemic because many consumers will prefer Acros Dorados' restaurants to smaller businesses that may lack the necessary "sanitary practices and hygienic practices."
Although the Latin American hospitality industry is among those hit hardest by the pandemic as most travelers are staying home, Iván Chávez, executive vice president of Mexican resort conglomerate Grupo Vidanta, echoed Staton's optimism about the post-pandemic world.
Chávez said the company's guests are "ready to come back" and are signaling they will take vacations as soon as they are able to.
"Going forward, we just have to adjust," he said. "We see ... reality is this new world. We're not fighting it. We're juggling those chainsaws and focusing on what we can do better."
Chávez said Grupo Vidanta has kept all of its full-time employees on its payroll and has been supporting its part-time staff as much as possible, including by providing meals for part-time employees and their families.
In Argentina, budget airline Flybondi has also avoided employee layoffs, according to COO Eduardo Gaspari.
"We need all of [our employees] for the time we restart the operation," Gaspari said, and Flybondi is not considering layoffs in the coming months.
He added that his outlook for the company remains "very positive" because the low-cost carrier runs efficiently and is a popular choice among travelers on the routes it services.
Argueta said the business leaders' positive forecasts were encouraging because major industries and large companies can help provide economic and social stability in otherwise struggling countries.
"We don't know what the new normal looks like," Argueta said. "But we do have an opportunity to shape that new normal [in Latin America].