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Editor's note: This article was first published in The American Lawyer's April issue.

Brazil is expected to drive the bulk of mergers, acquisitions and other deals this year in Latin America, as pro-business President Jaír Bolsonaro unloads public assets and dials back government investment.

The region's largest economy should draw an outsize amount of attention, lawyers say, picking up slack from the second-largest economy, Mexico, as anxiety over the decisions of leftist President Andrés Manuel López Obrador makes investors more wary of Mexico.

Elsewhere, social unrest has gripped much of the Andes, while once-strong economies like Argentina and Venezuela are attracting very limited interest from global investors.

Across the region, the emergence of the coronavirus is raising questions about dealmaking as economists and investors contemplate its broader impact. Commodity producers in countries such as Brazil and Chile depend heavily on purchases from China, which played an increasing role in recent years as an investor in Latin America.

"While there's interest in the region, there's a certain amount of caution," says Chantal Kordula, a New York-based partner with Cleary Gottlieb Steen & Hamilton who has concentrated on Latin American deals for more than a decade.

This caution could translate into cost advantages for buyers, as sellers become more realistic about price. There are generational shifts taking place at family-owned companies throughout the region as heirs look to divest due to lack of interest in the family business or to diversify risk in countries like Mexico where they feel the political winds shifting out of their favor. That could mean more outbound M&A.

Juan Francisco Torres Landa, managing partner for the Mexico office of Hogan Lovells, describes Mexico right now as a "buyer's market" with increasingly selective M&A activity.

"The circumstances in which you would have elements for investments and positive growth, we don't see them," says Torres Landa, noting that the current administration has largely eschewed foreign investment in infrastructure and energy.

As a contrast, the Brazilian government is subsidizing less infrastructure, stoking a need for greater private sector financing and investment. The government also aims to privatize services ranging from airport operations to ports, and to unload $29 billion in assets held by state development bank BNDES, all in an effort to shrink the public sector.

Brazil accounted for $76.5 billion in private equity, venture capital and M&A deals out of $126.6 billion announced in Latin America last year, according to data compiled by Transactional Track Record. And it looks to be "particularly hot" this year, says New York-based Cleary Gottlieb partner Jeffrey Lewis, fresh of a trip to Brazil.

Market liberalization and falling interest rates in Brazil have led to a growing pipeline of deals as players rush to tap capital markets. All that fresh capital should, in turn, fuel more M&A activity, Lewis says.

The Brazilian central bank trimmed its key Selic rate to a record-low 4.25% in February, while signaling that it may finally hit the pause button on months of monetary easing. Historically low rates have inspired more companies to finance locally, and spurred Brazilian investors to venture abroad to capture higher returns.

"The lower interest rates are creating a lot of opportunity in Brazil, including in capital markets," Grenfel Calheiros, head of Simpson Thacher & Bartlett's São Paulo office, says. "It represents a paradigm shift."

But the bulk of that work will stay within Brazil. The majority of the country's deals are domestic, meaning they employ Brazilian firms, and the Brazilian bar association only allows global law firms operating in the country to consult on international law. As a result, Brazilian firms took the top 10 spots in a ranking of deals in the country last year. Machado, Meyer, Sendacz e Opice Advogados handled the most deals by value—$15.9 billion—while Pinheiro Neto Advogados advised on the most by volume, counseling on 108 deals.