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Volume X, Number 187

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COVID-19 and Construction in Latin America

The impact of COVID-19 on global economies is being unfolded as we continue to experience the period of prolonged economic uncertainty. As the virus’ epicenter has shifted from Asia to Europe, and now Latin America, financial markets have plummeted and with them sectors such as the project development, infrastructure or construction sector on a worldwide scale. The construction sector, has started to experience the effects of the pandemic, nonetheless, the coming months will unravel the extent to which the effects will affect the sector in Latin America.

As witnessed, the majority of Latin American governments set strict quarantine measures almost at the same time as Europe began its lock down. Along with the international travel bans and internal mobility restrictions, measures to ensure employee health and safety, supply and material delay have decreased the expectations for the rest of 2020 and upcoming years. These factors have meant a major setback for the construction sector at all levels, from project planning, to proposals and bidding, to the most affected of all, ongoing construction projects. The impossibility of workers to go on site given lock down provisions, health and safety adjustment in the work place and job cuts, have slowed down the sector.

For Latin American workers, household incomes have reduced dramatically, causing a decrease and slow-down in the development of the local economy. As a response, the majority of Latin American governments have put in place stimulus packages with special focus in infrastructure and construction sectors as key areas of investment to get the economy back on track. In addition, mobility restrictive measures such as quarantines, have been eased for construction, maintenance or other project development purposes, in both private and public ventures in order for employees to attend the work sites, as well as for companies to continue carrying out their activities in order to meet execution dates, installments and deadlines. For companies, this means the possibility of executing projects within the foreseen terms, avoid entering into default and securing payment and cash flow to pay both employees and suppliers.

The region is also calling for a “green” recovery and a promotion of technological infrastructure with a special focus on improving or developing ports, roads, railways and transportation facilities. These go along with both multilateral organizations and investors looking over to align the projects with the United Nations Sustainable Development Goals.

© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume X, Number 153

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About this Author

José María Viñals Partner Madrid
Partner

Jose María Viñals is partner in our International Trade team and is based in our Madrid and Brussels offices. He has more than 15 years of experience as a qualified lawyer, with a focus on internationalization and a well-established sanctions practice. He has been active in the fields of FDI and international commerce, as well as Project Finance, investment protection and more recently FinTech.

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