Nearshore Americas

CFOs Expect Labor Unrest to Harm Latin American Economies

Three out of four chief financial officers (CFOs) in Latin America expect labor unrest and work stoppages to have a serious negative impact on the region’s economy in the next 12 months, according to a global CFO survey by North Carolina’s Duke University.

The most concerned are CFOs in Brazil, where demonstrations have threatened to overshadow the soccer World Cup that is now underway. According to the report, more than 80% of Brazilian CFOs are worried that labor unrest will harm their national economy.

Thousands of Brazilians are protesting across the country, angry that their government has spent billions of dollars on soccer stadiums instead of education and other infrastructure.

Duke University says it surveyed 843 business executives around the world for the report, including 106 CFOS in Latin America.

In Latin America, 73.1% of executives said they expected strikes, work stoppages or other forms of unrest to affect their countries’ economies.

Weak economic growth, inflation and wage pressure have been cited as major drivers of labor unrest.

“Emerging economies have been grappling with reduced demand and slower growth over the past couple years,” said Duke’s Finance Professor John Graham, the survey’s director, in a statement. “Now on top of weak demand, business leaders have to deal with a restless and in some cases combative workforce.”

However, CFOs in the United States said that they were more optimistic about the economy than they were during the first quarter.

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Asian and African firms are willing to use cash for hiring and marketing, while firms in Latin America are likely to use capital to pay down debt, the report found. Latin America businesses typically either want to hold onto their cash as a buffer or simply have no excess cash to spend, the report noted.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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