Construction of a port by a Chinese company in La Libertad, El Salvador.APHOTOGRAPHY (Getty Images)
The political change that Latin Americans have asked for with their vote in the recent elections in the region has been received with mistrust by investors and companies.
An index that qualifies the economic climate in Latin America, published periodically by the Brazilian Institute of Economy of the Getúlio Vargas Foundation (FGV), shows three consecutive quarters of deterioration.
This pessimism coincides with a political upheaval in the region.
Prepared through surveys with specialists in the 10 largest economies, the index identifies the main obstacles to economic growth.
In its latest edition, in which the war in Ukraine was included as a factor to consider, Latin American economists identified their top three concerns, in this order: lack of innovation, the government's economic policy, and corruption.
The FGV analysis shows that, between January and April of this year, confidence deteriorated the most in Argentina (-42%), followed by Chile (-36%), Ecuador (-23%), Paraguay (-20%) , Peru (-19%), Mexico (-19%), Colombia (-13%) and Bolivia (-8%).
In short, the report states, "the worsening in the assessment of expectations dominates the results of the economic climate."
That two of these three concerns – economic policy and corruption – depend on governments in the exercise of their functions is particularly revealing, since countries are experimenting with new political leadership.
In the last year, practically all the countries that had presidential elections voted to remove the party in power.
Ecuador, Peru, Chile, Honduras and Costa Rica have elected opposition candidates—some of them from the left and self-declared agents of radical change.
The only exception has been Nicaragua.
On June 19, Colombia will join this list, since the candidates who will seek to win the presidency in a second round are from opposition parties and both do not belong to the parties that have traditionally held power.
This reflects a growing tension between the big capitals, which are the investors and companies that pour resources into the economy, and the citizens in the street, explains Daniel Zovatto, regional director for Latin America and the Caribbean of International IDEA, an independent organization that studies democracy.
"First we have to ask ourselves, this distrust is from whom?" Zovatto questions.
"For risk rating agencies, for foreign and local investors, in general, having right-wing and center-right governments is,
a priori
, a sort of guarantee that certain issues central to their interests will be respected," he says. the specialist.
But it is just the protection of the interests of big capital that citizens have denounced since 2019, when social protests burst onto the scene in several countries, from Brazil to Colombia.
The demands include curbing rising inequality and greater social mobility for young people.
Environmental groups call for an end to the extractivist model that for decades has made natural resources the region's greatest attraction.
In the protests, citizens also ask to improve the quality of life, health services and education.
“What you have is a double look,” says Zovatto, “that of a young citizenry with few expectations and prospects, and that of the big capitals that seek to squeeze their business models and are not interested in a change as long as it gives them results.
These elites, who perhaps did an important task years ago, must understand that it is absurd to think that the genie can be put into the bottle”.
This week, international organizations revised down their prospects for economic growth worldwide, derived from the Russian offensive in Ukraine.
The war has prevented the production of cereals and fertilizers that were exported to different parts of the world, which could generate a food crisis in the poorest populations.
Latin America's gross domestic product (GDP) will grow 2.5% this year, according to the World Bank.
The Bank estimates that the per capita GDP of the region will increase by only 0.6% between 2019 and 2023.
Uruguay: the exception
The economic climate, according to the FGV index, only improved in Uruguay (+10%) and, slightly, in Brazil (+3%).
Uruguay is going through a different moment than the rest of its peers, in which the confidence of the population is strong enough for its president, Luis Lacalle Pou, to send structural reforms to Congress during the second half of his term .
"These include addressing key competitiveness issues: high fuel costs, declining educational outcomes, labor market rigidities, and narrow trade openness," according to a report by credit rating firm Fitch Ratings.
“In its first two years in office, the government has made significant progress on fiscal consolidation, reflecting well-targeted pandemic relief measures, resilient revenues, and below-inflation wage increases that have resulted in cost savings. public salaries and indexed pension benefits”, concludes the company.