We are republishing this story with the opinions given by The Economist Editor Michael Reid in statements, in which he affirmed that, in Peru, Chile, and Colombia, there are reasons for investors to worry, but a stampede for the exit would be premature.
Latin America has suffered very heavily because of the COVID-19 pandemic but, macro-economically speaking, the region has recovered from the sharp drop of last year more rapidly than expected, according to The Economist's Editor and Columnist for Latin America, Michael Reid.
Economically speaking, he said, China is emerging more strongly, after the COVID-19 pandemic, followed by the United States; with the strongest impacts observed in Europe and Latin America.
In addition, with inflation, interest rates —which have been low since 2008— may rise in the medium term, he said at the Investor Conference 2021 organized by
Credicorp Capital.
About Latin America
Latin America has suffered very heavily because of the COVID-19 pandemic but, macro-economically speaking, the region has recovered from the sharp drop of last year more rapidly than expected.
"In late 2021, most countries will recover what they lost, but that does not imply the two lost years in terms of growth of their (gross domestic) product and employment," the columnist for Latin America explained.
In 2022, he said, Latin America may return to normal, but this is a drama, because normalcy prior to the pandemic was mediocre and problematic.
Reid explained that —with five years of economic stagnation or slower growth— the perception of the population has led to a narrowing of opportunities and an evident socio-political unrest, expressed in three forms.
One of these forms has been the victory of opposition candidates (left wing or right wing) in most of the recent elections. This situation has been a dominant trend, he said.
The other ones involved the election of communist presidents in Brazil and Mexico, and street protests in various parts (of the region), he added.
According to The Economist's editor, the pandemic turned this unrest into anger in various countries, so it was relevant to understand the causes of such unrest and anger.
In the first decade and a half of this century, Chile, Colombia, and Peru were the most successful countries —economically speaking.
However, the economic slowdown and the narrowing of opportunities led to frustration and made the multidimensional inequality —existing in Latin America and these countries not only in incomes and wealth, but also in services and treatment of citizens by the State— less tolerant.
Peru
In Peru, the highly polarized campaign and victory of Pedro Castillo (as President of the Republic) are the culmination of a political breakdown that began long ago but intensified in the 2016 elections, he commented.
Reid pointed out that the Peruvian Constitution is recent. It was adopted during the government of former President Alberto Fujimori, whose referendum to approve it was freer than that of Chile —under the command of Pinochet.
"I think changes are less necessary, and I would view with great concern the initiation of a constituent process in Peru at this time," he stated.
The senior editor also noted that in Chile, Colombia, and Peru, people can vote freely, adding that constitutional rules have been complied with so far. There are reasons for investors to worry, but a stampede for the exit would be premature.
(END) MMG/JJN/RMB/MVB
Published: 9/23/2021