The Georgetown Americas Institute (GAI) hosted a panel Jan. 30 to discuss the regional forecast for Latin America and the Caribbean in the upcoming year.
The panel, titled “Latin America and the Caribbean in 2023: What to Expect?” featured Monica de Bolle, a senior fellow at the Peterson Institute for International Economics; Michael Shifter, an adjunct professor at Georgetown University; Shantall Tegho, a managing director at Goldman Sachs; and Alejandro Werner, GAI’s founding director. The event focused on political extremism, political instability and economic market outlooks in Latin America and the Caribbean.
The panel came amid vast protests in the Latin American region in recent months, with large-scale demonstrations against the lack of social mobility in Colombia and Chile, the elimination of fuel subsidies in Ecuador and election fraud in Bolivia.
The center of discussion was Latin America’s largest country, Brazil, which experienced a highly divisive election in which the winning candidate, Luiz Inácio Lula da Silva, won by 1.8 percent of the vote over far-right incumbent Jair Bolsonaro. Fervent supporters of Bolsonaro protested the election results, which many believed to be fraudulent, by storming key government buildings in the capital of Brasilia.
De Bolle said that the new government of Brazil, under Lula’s leadership, has a long road ahead of them to mitigate political division.
“There’s a lot of rebuilding and a lot of reconstruction to be done,” de Bolle said at the event. “Surely, some of it will be done. But it’s four years — it’s four years to rebuild an entire country, to give people the competence that they once had. That social mobility will be back, that inequality is going to be reduced, that yes, politicians are going to respond to the needs of the people: these are the basis for Lula’s election.”
These issues are confounded by Latin American free trade agreements, which have not seen monumental success, according to Werner.
“We have not seen any of the free trade agreements signed with the U.S. be a game-changer in Latin America,” Werner said at the event. “NAFTA in ’94, the Colombian free trade agreement with the U.S., the Chilean free trade agreement, they were very good. They significantly affected in a positive way some regions of these countries, but these are not European Union integration processes.”
“Obviously, Latin America stands out for a region that has constantly disappointed markets,” Tegho said at the event. “We did come out of the COVID prices with growth that was never able to go back to the levels we saw pre-2020. We had very violent political forces in the last few years, and that is not going to change in the future.”
Shifter said corruption, crime and inequality are the three issues key to analyzing and predicting the state of Latin American affairs in 2023.
“When do you expect those to be reduced in 2023?” Shifter said at the event. “It is not easy to come up with a lot of encouraging responses. And those are three critical issues that certainly contribute to political volatility.”
Tegho said that conditions in Latin America are largely dependent on the state of the American and Chinese economies because of the region’s dependence on external markets.
“For Latin America, the two most important driving forces of external conditions are U.S. growth and Chinese growth,” Tegho said. “Latin America absorbs external conditions, they never dictate external conditions.”
Shifter said he has cautious hope for the political state of the region because people are largely still committed to voting, despite the region’s general instability.
“Democracy is under stress,” Shifter said. “It is under stress, but it survives.”
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