Latin America's "disappointing" economic development weighs on forecasts for 2021

A public market in Hermosillo, a state in northern Mexico, last December.Norte Photo / GETTY

The political division in the United States, the slowness and mismanagement of the coronavirus vaccine, low oil prices are some of the ten most important risks for the world in 2021 identified by the consultancy Eurasia Group.

In their report published this week, the CEO, Ian Bremmer, and its president, Cliff Kupchan, also singled out Latin America, arguing that its "disappointing" economic performance undermines development.

"As they emerge from the pandemic, Latin American countries will face sharper versions of the political, social and economic problems that they were already facing before the crisis," the report says.

"There will be no widespread availability of vaccines until well into the second half of this year, and Latin American countries are poorly positioned to face another wave of coronavirus before then."

Economic issues are already coming to the fore, the report says, and there is no global leadership in political models or business standards to follow.

The rest of the risks identified by Eurasia Group for this year are the coronavirus, climate change, geopolitical tensions between China and the US, privacy and access to personal data, cyberattacks, the weak economy in Turkey and the departure of German Chancellor Angela Merkel.

“Just as 2020 was overwhelmingly about health care responses to COVID-19 (and how many governments got it wrong), 2021 will be overwhelmingly about economic responses to persistent COVID-19 symptoms and scar tissue (the burden of disease). debt and misaligned policies), even when vaccines are deployed and the health emergency fades, ”say the experts.

In the US, for example, despite having one of the largest vaccine inventories, authorities have admitted that the vaccination campaign has taken longer than expected, delaying the economic recovery.

In emerging countries, the low capacity to provide stimuli and safety nets means that these effects will be felt stronger, says the report.

"The problem will be most acute in Latin America, the Middle East and Southeast Asia," they point out, "vaccination programs in emerging markets will be slowed down by poor distribution infrastructure."

“In Latin America, the main political conflictive points are already highlighted in this year's intense electoral calendar: legislative elections in Argentina and Mexico, as well as presidential elections in Ecuador, Peru and Chile.

These five countries have experienced a significant fiscal deterioration, derived from increased spending to mitigate the economic impact of the pandemic, ”says Eurasia.

The consulting firm predicts a weakening of the Government of President Alberto Fernández in Argentina in the elections, and a good electoral result for the President of Mexico Andrés Manuel López Obrador.

The results of this summer's election, assures the consultant, will be favorable for the party of the Mexican president, will preserve its majority in Congress and López Obrador's popularity will remain high.

"This will allow their schedule to continue and the business climate to deteriorate," they point out.

In Ecuador, Chile and Peru, social discontent could open the door to populist candidates, Eurasia says.

“Given increasing poverty, growing inequality, and high unemployment, the rulers will not be willing to make politically costly decisions, such as cutting spending on social services;

in fact, the elections will be an incentive for politicians, especially those in the legislative branch, to promote policies that put greater pressure on the finances of their countries ”.