Look for recovery in 2010, but it’s likely to be slow
The U.S. economy faces muted growth for years, yet business opportunities abound in China, Brazil and other nations, and in select U.S. industries, panelists said at World City’s latest Global Connections on Jan. 29.
In Latin America, information technology services are booming as an alternative to India, especially for U.S.-focused clients, said Claudio Muruzabal, chief executive of Neoris, an IT consultancy based in Miami with 3,500 consultants in 14 countries. Neoris nearly doubled its U.S.-focused staff last year, he said.
China — with a successful stimulus plan spurring nearly 10 percent economic growth last year — beckons both exporters and investors. And Brazil — Florida’s top trade partner — now is rising, with growth averaging about 4 percent a year and credit easing for consumers, said John Price, managing director of business intelligence, Latin America for risk services consultants Kroll Associates in Miami.
In Miami-Dade County, healthcare and life sciences remain strong, and the depressed real estate market is luring many foreign investors, including Europeans whose strong euro stretches far to buy condos in bulk, said Frank Nero, chief executive of economic development group The Beacon Council.
“Asians are kicking the tires a lot” for investments in Miami-Dade as well, Nero told an audience of more than 100 people at the “Global Outlook 2010” forum that opened this year’s 10-event series.
Here are highlights of the January forum, where participants fielded and answered questions on topics from Latin American competitiveness to Miami’s top rivals.
On the U.S. economy: While the United States is technically out of recession — the economy grew in the third and fourth quarters last year, jobs will be slow to recover, and deficit woes mean “muted growth in this country for at least 10 years,” Price said.
On Latin American economies: Growth is diverging among countries. Structurally, those that rely more on selling metals, food and other basics to China — including Brazil — are faring better. Those that depend more on the U.S. market for sales, tourists and remittances — such as Mexico — lag.
Policy-wise, those that are more market-oriented — such as Chile and Panama — are growing faster. Those more populist — including Venezuela and Ecuador –are dragging, said Jerry Haar, an associate dean and professor of international business at Florida International University.
“You can no longer look at Latin America as a region,” said Haar.
On South Florida real estate: Get ready for a new wave of foreclosures in 2010 — this time on homes with traditional fixed mortgages and on commercial real estate. Many mortgage holders could fall behind on loans this year, as property values remain low, new jobs limited and business sluggish, Nero said. Unemployment in Miami-Dade now tops 11 percent and likely won’t budge much this year, he said.
Price figures it could take up to seven years for local homes to regain their former prices in dollar terms, but even then, true values will be lower because of inflation and the weak dollar.
On Miami’s rivals: Multinational companies often look to Miami for offices that handle Latin America or as a entryway to the U.S. market. Location scouts usually inquire first about skilled talent, where Miami scores high, and about schools for managers’ children, where the city lags, Nero said.
Scouts generally look at nearby Broward or Palm Beach counties as options for international offices. Miami’s rivals instead include Sao Paulo in Brazil, Mexico City in Mexico, Panama City in Panama and Houston and Atlanta in the United States, said Nero.
On Latin American competitiveness: Latin America is losing business competitiveness to Asia and Eastern Europe. Even some African nations are making faster strides, shrinking the time it takes to start a company and strengthening schools, said Price and Haar who co-wrote a book on the subject.
Joked Haar: “Can Latin America compete? No. Now, go back to sleep.”
On export opportunities: Latin America tends to offer less competition for sales than some world regions, so profit margins may be higher. Exporters that can read economic cycles and navigate sometimes corrupt governments and businesses can fare well, especially short term, Price said.
“You make money today in Latin America. You make money in the long-run in Asia,” said Price on a question from Nehama Bikovsky, president of Zim-American Integrated Shipping Services in Miami.
Still, Venezuela holds special risks now because of foreign exchange restrictions. It’s hard to get dollars out of that South American country, added Marcia Cleary, a manager at Citibank in South Florida.
On investment opportunities: The cost of companies and properties in Mexico fell so much during the recent recession that many are now undervalued and present investment opportunities, said Price, responding to a query from Matthew Cole, a partner in North Bay Equity Partners.
On Cuba and Haiti: Despite growing financial woes in Cuba, the chances for Havana embracing more U.S. business appear to be “zero,” said Haar, replying to Todd Jonas, president of TJAA Architects.
“It’s the same story on Cuba today as the story on Cuba yesterday and Cuba tomorrow,” Haar said. “Have you seen Samuel Beckett’s play ‘Waiting for Godot?,’ ” he joked. “Hope is not a strategy.”
Nero said earthquake-stricken Haiti should offer more immediate opportunities for South Florida companies in construction, shipping, planning and other fields: “Haiti is going to need everything.”