Latin American Businesses Look to Past in Adapting to Current Economic Downturn
Published November 4th, 2009
Businesses across Latin America are using the global recession as an opportunity to call on past economic experience as they review and reshape their operations and prepare for economic recovery, a new survey by KPMG International revealed.
According to the survey — issued today in a report titled “Out of Adversity” at KPMG’s Ibero-America Tax Summit in Santiago, Chile — Latin American businesses appear to have taken the recent global recession in stride, drawing on their experiences during past difficult economic times within their own countries to manage through the current downturn.
The KPMG poll, which surveyed 165 business executives in Argentina, Brazil, Chile, Columbia, Mexico, Peru, and Venezuela on their reactions to the current recession and plans for the recovery, indicates that only 5 percent of Latin American respondents had no past lessons to help them deal with the downturn.
“The survey results tell KPMG that in many Latin American countries the global problems are viewed as an almost routine part of business, and executives are adapting quite well by responding thoughtfully and moderately,” said Shaun Kelly, chair, Americas Tax, for KPMG LLP, the U.S. audit, tax and advisory firm.
“Their responses indicate that the financial crisis has had a different impact within Latin America than in regions whose economies had been enjoying unprecedented prosperity for some years, such as Europe and the United States,” Kelly said.
The KPMG survey reports that 61 percent of Latin American businesses said they are making substantial changes to their near-term (12-month) business strategies, ranging from finding new markets to focusing on cutting costs and optimizing business processes.
Mexico leads in this area, where 80 percent of companies surveyed planned changes in the year ahead and 76 percent planned longer-term changes. In addition, 59 percent of respondents are also radically rethinking their long-term strategies, considering significantly changing their business operations or developing new products.
Latin American companies also have a sharp focus on tax management, according to the KPMG survey, with 45 percent of respondents reporting they have identified tax as a potential source of cash savings and have stepped up their tax planning to take advantage of these opportunities.
