Latin American economy rebounding faster than expected. Some nations will commit political suicide, anyway | Opinion
The good news about Latin America is that the region’s economy will rebound much faster than expected, mainly because of a sharp rise in U.S. and Chinese imports. The bad news is that the region’s politics will most likely ruin the recovery.
The global economy is expected to rebound by 5.8 percent this year, much more than the previous estimate of 4.2 percent, according to a new report from the Organization for Economic Cooperation and Development (OECD,) a club of mostly industrialized nations. The worldwide recovery will be a big boon for Latin American commodity and manufactured goods exporters.
Brazil, the largest economy in the region, is expected to grow by 3.7 percent this year, Mexico’s economy is projected to expand by 5 percent, Argentina’s by 6.1 percent, Colombia’s by 7.6 percent and Chile’s by 6.7 percent, according to the OECD estimates.
While some economists had predicted that it would take the region an entire decade to erase the economic losses of the COVID-19 pandemic, the OECD now says it will take much less time. Brazil is likely to reach its pre-pandemic per capita growth rate in mid-2022, Mexico in late 2023 and Argentina in late 2026, it says.
But, as their economies rebound, several countries are on the verge of committing political suicide.
In Peru, extreme leftist candidate Pedro Castillo, a 51-year-old elementary school teacher and union leader, was slightly ahead in the polls days before the June 6 presidential elections.
Although he has moderated his political platform in recent weeks, the government plan he presented when he registered to run for president earlier this year says that his party is “leftist socialist” and that people have to “embrace the Marxist theory.”
Even if he loses, Castillo could still remain as a major political force in the country.
In Mexico’s mid-term elections on June 6, old-guard populist President Andres Manuel Lopez Obrador is hoping to win a two-thirds majority in Congress that would allow him to reform the constitution and grab additional powers. If he gets that absolute majority, he could feel emboldened to escalate his daily attacks against independent institutions and the media. Mexico could become an increasingly authoritarian state.
In Colombia, Gustavo Petro, a leftist former mayor of Bogota and ex-member of the guerrilla M-19, is leading in the polls for the elections in May 2022. Top officials of Colombia’s right-of-center government describe him as a radical who would gradually install a Venezuela-style dictatorship.
In Chile, Latin America’s most prosperous economy in recent decades, far left and anti-establishment candidates — including Communist Party politicians — were among the biggest winners in the May 16 elections to pick members of an assembly that will draft the country’s new constitution.
In Argentina, President Alberto Fernandez recently has changed his foreign policy by, among other things, withdrawing the country’s petition to the International Criminal Court to investigate Venezuela for its near 7,000 extrajudicial executions during the anti-government protests in 2018 and 2019.
Argentina also joined China, Russia, Cuba and Venezuela in demanding a U.N. investigation into Israel’s use of force in the recent conflict in Gaza, without requesting a similar probe into the Hamas terrorist group’s more than 4,000 rockets fired into Israel.
China and Russia became the biggest suppliers of COVID-19 vaccines to Latin America during the Trump administration last year. The Biden administration said recently that it will start sending more than 6 million excess vaccines to Latin America as part of the U.N.’s COVAX global-vaccination initiative.
Amid the current rise of world prices for raw materials, there is a real danger of a new wave of commodity-fueled populism in the region. Like in the early 1980s and between 2005 and 2010, populist leaders may squander their new export income in massive short-term giveaways, instead of using the money to diversify their countries’ exports and for quality education, healthcare and roads, which will produce long-term growth.
Just as bad, the coming economic windfall may go to their heads. They are likely to become increasingly authoritarian, further eroding the rule of law and provoking new stampedes of departing domestic and foreign investors. Last year, foreign investments in the region plunged by 37 percent, according to U.N. figures.
If Venezuela’s recent history has shown anything, it’s that even countries that are most blessed by commodity booms can fall quickly from being among the richest to the poorest in the world. It may happen again — and, unfortunately, in several countries.
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