In 2022 Latin America will have the challenge of consolidating its economic recovery

Some countries will have special challenges during the next year.

Coronavirus pandemia began in the first quarter of 2020 and since then has affected all aspects of human life, including the economic development of countries.

Therefore, Latin America faces in 2022 the challenge of consolidating its economy, currently in recovery, but with a field undermined by inflation, social and political instability and the impact of a pandemic even without control.

To a greater or lesser degree, but always present, these three issues are transversal in all the great economies of the region, as well as the rise in the dollar and commercial tensions, which add turbulence to a very complex panorama.

Juan Carlos Martínez, professor of IE Business School thus summed up the situation: “The main challenge that Latin America has in 2022 is the consolidation of growth. An economic growth that has been important in 2021, above 6 %, but which will be much lower in 2022 ″.

These are some of the particular challenges that will face the main Latin American economies.

Argentina

The main challenge of Argentina for 2022 will be to reach an agreement with the International Monetary Fund (IMF) to refinance debts for about 43.3 billion dollars, an essential pact for the country to differ the heavy maturities that must be faced since March and not again at the edge of the default.

Without an agreement, Argentina's biggest challenge will be to deal with a worsening macroeconomic variables, mainly the fiscal deficit, exchange tensions and high inflation, a gloomy panorama that would strongly condition the economic recovery process initiated in 2021, after three years of severe recession.

Brazil

Brazil has all the ingredients to complicate its economic reactivation, with all that that implies for the region as a whole.

It has a scenario of stagflation, with inflation and unemployment in two digits, and enormous political uncertainty in a 2022 that will be marked by the polarized presidential, legislative and regional elections.

Thus, the projections for 2022 are of weak growth (0.5 %), weighed by the fragile macroeconomic data, upward interests, the dollar for clouds and misgivings of investors due to the more than probable paralysis of the reform agenda in Congress during the electoral campaign.

Colombia

Colombia must maintain in 2022 the good rhythm economic reactivation that caused it to grow in 2021 about 10 %, in a context marked by high inflation, unemployment that does not recover early levels and electoral appointments.

By 2022, the Organization for Economic Cooperation and Development (OECD) projects an expansion of the economy of 5.5 %, similar to that predicted by the financial sector.

Inflation, which at the end of November was 5.26 %, one of the highest in recent years, is the enemy to beat for the country's authorities, and thus the Bank of the Republic already began a gradual rise of the types that led him last Friday to upload them Medo point to 3 %.

Another challenge is unemployment, which is maintained above the two digits and has not yet returned to the prepaandia levels.

To this is added a political context marked by the presidential elections planned for May, with second round in June.

Chile

After suffering in 2020 the largest economic setback in four decades, the Chilean economy will end 2021 with an increase of between 10.5 % and 11.5 %, according to estimates of the Central Bank, supported by international organizations such as the OECD.

However, by 2022 the scenario is expected much more difficult, with a growth around 2 % that will be maintained until 2023, according to the OECD, as the fiscal support of the aid before the pandemic is reduced and the savings and liquidity accumulated by the citizens are finished.

From the outset, Chile will have to address the overheating of the economy that raised inflation in November to 6.7 %, the largest from the financial crisis of 2008 and well above the target range of the Central Bank, between 2 %and 4 %.

A particular Chilean feature is the uncertainty about its pension system, which has been decapitalized after the departure of more than 50,000 million dollars in the withdrawals authorized by the authorities to stop the Covid-19 crisis.

This issue will be the subject of debate both in regards to the writing of the new Constitution and in the policies of the new government of the leftist Gabriel Buric, winner of the presidential elections and that will assume power in March 2022.

This constituent process that Chile is carried out will culminate in 2022 with a proposal from Nueva Carta Magna, another question that will weigh on the Chilean economy.

The "extreme" and "historical" inequality of the country, origin of the social protests of 2019, can re -generate a citizen outbreak based on the development of the constitutional discussion and the practices of the new executive.

Mexico

Mexico expects to grow by 2021 around 6 %, pushed by consumption and the renewed treaty between Mexico, the United States and Canada (T-MEC), in force since mid-last year.

But factors such as high inflation - which will close this year over 8 % - and initiatives such as energy reform, which seeks to strengthen state electric to the detriment of private ones, have generated uncertainty among entrepreneurs, which fear that it affects investments.

But Mexican concerns go more about the commercial issue and disturbances in global flows, which, for example, affect their important automotive industry.

Peru

Peru's challenges are also very large and touch almost all aspects of their economy, with the remarkable nuance of political instability that can make a flattering perspectives derail.

Growth projections are in a healthy fork between 8.5 and 12.7 % and only inflation, at maximum for decades (5.83 % in November) almost double the estimated target range of 3 %, it is a visible and evident macroeconomic problem.

However, the tension and political uncertainties around the government of the leftist Pedro Castillo will be the ones that mark the passage of next year.

The Congress, a fief of those who did not accept the president's electoral victory, is launched in achieving their dismissal, in an environment where the business sector and the economic elite have not received well the diffuse economic proposals of the president.

The ghost of nationalizing economic sectors still has not been exorcised, and that will weigh in 2022.

In addition, Castillo must deal with the serious structural problems of Peru, such as health, education and informality, which were naked with the attack of COVID-19.