Economy

Wave of protests caused growth forecasts to drop in Latin America

IMF data collected by the newspaper La Republica shows the influence of social dissatisfaction in the region's political uncertainty scenario

Protests in Santiago last 29th OCtober.
Protests in Santiago 29th October of 2019. Photo: Shutterstock
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  • Despite this, the demonstrations were not the decisive reasons for the reduction in growth forecasts, but they have collaborated to intensify an old problem in Latin American countries: the scenario of constant political uncertainty;
  • Even so, Colombia, alongside Peru (with a 3.2% increase in GDP) and, mainly, Brazil (2.2%), should lead the region’s growth this year.

As expected, the wave of protests that broke out in 2019 influenced economic forecasts for Latin America. Data from the International Monetary Fund (IMF) analyzed by the newspaper La Republica show that the demonstrations that took thousands of people to the streets of cities in Colombia, Chile and Bolivia last year collaborated to reduce economic growth forecasts for Latin America and for those countries.

For the region as a whole, the forecast was reduced by 0.2 percentage point, to 1.6%.

For Colombia, the IMF foresaw a 3.5% growth in GDP this year. The number is 0.1 percentage point lower than that released in October 2019 (3.6%). Although this growth is similar to that projected by other entities, such as the Economic Commission for Latin America and the Caribbean (ECLAC), it differs from the predictions of other entities, such as the World Bank and the Bank of the Republic, which project an advance of 3,6% and 3.3%, respectively, for the Colombian economy.

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Despite this, the demonstrations were not the decisive reasons for the reduction in growth forecasts, but they have collaborated to intensify an old problem in Latin American countries: the scenario of constant political uncertainty.

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“The uncertainty about economic policies has also increased in these countries as governments consider different options for economic reforms and policies to make growth more inclusive and to meet social demands” thus generating an effect on the figures, Alejandro Werner, member of IMF and economic analyst for the region to La Republica.

Even so, Colombia, alongside Peru (with a 3.2% increase in GDP) and, mainly, Brazil (2.2%), should lead the region’s growth this year.

But analysts are also pragmatic in saying that forecasts are predictions, and that the end result will depend on how governments will balance social pressure to promote well-being and the need to open up economically.