The Inter-American Development Bank warned last week that Latin American nations must improve public services and enlist businesses to reduce inequality and create societies that operate more fairly or their economies will continue to suffer.
The Bank noted that the region’s political culture has shifted from dictators forcing obedience on a populace to popular uprisings demanding leaders provide better services and economic opportunities.
This statement comes after Chile, seen as a South American economic success, has been struck by massive demonstrations and riots by citizens who are fighting for better basic living standards and against government corruption.
And, as we have continually reported in the Trends Journal, violence has erupted in Ecuador and Bolivia, Peru dissolved its parliament, and Colombia has been swept by mass protests.
Economic growth overall across Central and South America has averaged 0.8 percent annually since 2014. Before the coronavirus arrived, estimates for growth were the same for 2020.
The report noted few of the region’s nations have developed their economies beyond exporting oil, timber, minerals, and other natural resources as opposed to Southeast Asian nations that created industries to export manufactured goods.
Bright Spots
There are bright spots. Uruguay is developing a robust digital economy, Costa Rica has a thriving business services outsourcing sector, and Mexico is hosting a $120-million initiative to improve women’s and infants’ health by combining private sector donations, financial expertise, and a system of care that pays according to results.
Improving education and productivity, distributing wealth more fairly, and investing deeply in digital economies, however, are among tasks that remain, Uruguayan President Evo Morales said.
Brazil: Promised Economic Boom is Silent
When Brazilian president Jair Bolsonaro was inaugurated on 1 January, 2019, he implemented pro-market reforms and privatization initiatives designed to kick-start the nation’s sluggish economy.
He cut education outlays, environmental protections, and reduced overall government spending by 0.4 percent. The government’s investment bank also cut lending to encourage businesses to reinvest more of their profits.
After a year of his policies, growth has slowed instead of quickened.
Brazil’s economy grew 1.1 percent in 2019, down from 1.3 percent in each of the previous two years and less than half of the 2.5 percent Bolsonaro had forecast when he took office… and growth before the coronavirus struck was about to be 1.1 percent for 2020.
Brazil, a nation of 212.5 million people, reported 31 cases of the virus, and no deaths thus far from it.
More Cheap Money
Brazil’s central bank announced it is prepared to cut interest rates for a sixth time since July 2019 to nudge the economy. The rate stands at 4.25 percent now.
But policy issues are only part of the problem. Brazil’s economic stagnation is also touched by neighbor Argentina’s fiscal collapse, slowing global trade, a confrontational relationship between Bolsonaro and the legislature… and now the virus panic.
At a recent appearance before Brazilian journalists, Bolsonaro wouldn’t answer questions about the economy’s poor performance and deferred to a comedian who accompanied him. The comedian was dressed to mimic Bolsonaro and, when asked a question, said, “What’s GDP?”
“It takes a dumb president to find the ‘humor’ in growing poverty and inequality,’ Senate opposition leader Randolfe Rodrigues tweeted.
TREND FORECAST: As economic conditions continue to deteriorate, protests, violence, and crime will escalate in Brazil and in nations throughout the world. As Gerald Celente has long noted, “When people lose everything, and have nothing left to lose, they lose it.
