“Latin America’s Rising Right” Mohammed El Erian, Project Syndicate, 7 June 2016

“Changes in Government in Argentina and Brazil (...) Latin American politics appears to be undergoing a rightward shift.  Rather than being ‘pulled’ by the attractiveness of the economic policies that the right is advocating, this complex phenomenon is predominantly a reflection of the ‘push’ implied by anemic growth and the disappointing provision of public goods, especially social services”.

After years of fiscally irresponsible populist rule by the Kirchner family, Argentina opted for Mauricio Macri and his right-wing platform. In Brazil, President Dilma Rousseff has been sidelined by a “temporary impeachment,”  signaling a shift away from the policies of the leftist Workers’ Party. In Chile, President Michelle Bachelet was reelected, but her Government is moving to the right on economic policy. Cuba, under President Raúl Castro, is enlarging the legal scope for private businesses. And in Venezuela, a country tragically flirting with “failed state” status, Nicolás Maduro’s Government confronts mounting economic and financial challenges stemming from fiscally unanchored policies begun under his predecessor, Hugo Chávez. Facing widespread shortages of goods and malfunctioning markets, including for foreign exchange, his Government has lost control of the National Assembly, and the opposition seeks to shorten his term by constitutional means. Several key factors drive the region’s political dynamics. 1) The sharp drop in international prices for commodities, together with a slowing Chinese economy. 2) Popular dissatisfaction evident even in traditionally well-managed countries, such as Chile, where lower-income groups have done relatively well in recent years and where the scale of official fraud pales in comparison to neighboring countries. Rightist parties and policy agendas are the main beneficiaries of the region’s economic and social disillusion. The hope is that political change can catalyze faster growth, by revamping existing policies and pursuing more effective anti-corruption campaigns. But unless today’s political winners deliver notably higher and more inclusive growth, their electorates will move on. The current shift will prove to be only a stop on an uncertain path --politically more complicated and economically harder to navigate-- toward an even less stable destination.

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“Latin America’s Rising Right” Mohammed El Erian, Project Syndicate, 7 June 2016


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