What Latin America must address in 2022

As of early 2022, COVID-19 and its economic and social consequences continue to pose a threat around the world. The pandemic has left a legacy of death, unemployment, increased inequality and poverty. Governments have been challenged to balance their primary obligation to preserve lives with the need to safeguard their economies. It has also tested their resilience as they have had to diligently adjust their strategies and measures to respond to the dynamics of changing and uncertain circumstances.

In the case of Latin America, it is important to underline the differences between countries: the diversity of economic and social conditions; the different approaches and policies with which each country has faced the crisis, including the scope and efficiency of their vaccination programs. Although an individual analysis by country must be done, in general terms, the pandemic reached Latin America in a complex regional context where the structural economic and social deficiencies had not been resolved. Some countries in the region already maintained low levels of trust in public institutions, citizen dissatisfaction with the quality and coverage of public services, high levels of inequality and labor informality, social protests, and acute polarization further exacerbated through social networks. social.

Governments have been challenged to maintain a balance between their primary obligation to preserve lives and the need to safeguard their economies.

Furthermore, although there were signs of economic recovery in late 2021, inflation, depreciation of local currencies and fiscal deficits will make the recovery more complex. According to data from the International Monetary Fund, GDP is estimated to have rebounded, growing an average of 6.3% in 2021. A more moderate growth of 3% is estimated in 2022, however, growth will not reach pre-pandemic levels.

The World Economic Forum’s 2022 Global Risks Report suggests that 16% of global experts and leaders surveyed are optimistic about the global outlook and only 11% believe there will be an accelerated recovery from the pandemic. The vast majority believe that some degree of uncertainty, volatility and divergence will persist. As for Latin America, according to the executive opinion survey carried out in 18 countries in the region, the greatest effects of COVID-19 in social matters are unemployment, livelihood crises and an evident erosion of social cohesion.

Although there were signs of economic recovery in late 2021, inflation, depreciation of local currencies and fiscal deficits will make recovery more complex

In environmental matters, natural disasters and extreme events and the reversal of climate action, together with the loss of biodiversity, are classified among the potentially most serious risks for the region in the next decade. On the economic front, respondents are concerned about prolonged economic paralysis, debt crises, inflation, volatility in commodity prices and the collapse of social security systems. Government stimulus packages were vital to protect people’s incomes, secure their livelihoods, preserve jobs and keep businesses afloat, but the public debt burden has increased. Public budgets will continue to be tighter after the pandemic, making it clear that greater public-private collaboration is essential to better face new challenges.

In relation to connectivity, digital inequality is seen as an imminent threat to the world, as more than 3 billion people remain unconnected. If not addressed, the gap could not only seriously widen between developed and developing economies, but also within countries. However, it must also be recognized that some countries and industries were able to quickly access and adapt smoothly to new forms of digital interaction and remote work, which are likely to remain. This digital leap and the greater dependence on digital systems also entail greater vulnerability, which is why rigorous cybersecurity plans must be foreseen. Finally, the “collapse of the State”, the proliferation of illicit economic activities, geoeconomic confrontations and the geo-politicization of strategic resources also emerge as critical concerns among those surveyed, also mentioning the high regional concern about the deterioration of democracies and the serious migration phenomenon.

In relation to connectivity, digital inequality is seen as an imminent threat to the world, as more than 3 billion people remain unconnected

While pressing domestic challenges require immediate attention, the pandemic and its socioeconomic consequences have once again demonstrated that global risks do not respect borders or political divergences, and shared threats require a coordinated global response. Latin America cannot be conceived in isolation from the facts and trends that prevail in the rest of the world. On the contrary, the need to insert ourselves more into the global context, where the region has been losing prominence, is evident.

There are certainly some positive aspects and important opportunities have also emerged. As well as the growing recognition of the startups and innovative Latin American “unicorns” has recently attracted significant investment flows, our region, which has vast natural resources and valuable human capital, must be at the forefront of emerging opportunities in terms of energy transition, green markets and jobs, modern infrastructure and preparing new generations with the technological capabilities and skills aligned to the employment opportunities of the future.

Latin America cannot be conceived in isolation from the facts and trends that prevail in the rest of the world

Ignoring the potential risks indicated will not prevent their occurrence, rather they should alert us to respond to them responsibly and promote the integration of our region, putting aside ideological divisions and coordinating better to advance innovative solutions that address structural problems. We must promote greater productivity with a long-term vision to provide certainty at the national level and, hopefully, also regionally, with a formula that integrates traditional socioeconomic indicators with solutions in terms of resilience and inclusion, as well as responses to environmental challenges.

To a large extent, Latin America’s potential to achieve a better recovery will depend on knowing how to apply the lessons learned and the committed and coordinated action of leaders from all sectors. That the social and economic injuries and scars left by the pandemic serve as a reminder to put aside internal divisions, ideological differences or historical frictions and rivalries, and allow us to outline a pragmatic agenda that ensures that the next decade is not another lost decade .

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