MercoPress. South Atlantic News Agency

Political crises might impact Latin America's economy, IMF team warns

The year 2023 is likely to be challenging for the region, the IMF found

A technical team of the International Monetary Fund (IMF) has warned that political unrest in various regions of Latin America might have consequences for the economy since it would affect how the region is perceived worldwide.

“The continued possibility of unrest and political paralysis has the potential to erode confidence and weigh on economic activity,” the Fund noted in a brief by analysts Gustavo Adler, Nigel Chalk, and Anna Ivanova.

The research does not mention any specific crisis but underlines that growing social unrest and declining confidence in public institutions have been major trends in the region for some time.

“Social tensions were certainly exacerbated during the pandemic. The poorest people, particularly those working in face-to-face services, were the hardest hit by the economic consequences. While government support helped, many could not completely isolate themselves from the negative impact, as evidenced by the marked increase in poverty,” the analysts found.

Although the region's economy expanded by almost 3.9% in 2022, inflation receded and employment recovered strongly, “2023 is likely to be a challenging year for the region,” the study also points out.

According to IMF projections released this week, Latin America and the Caribbean will grow 1.8%, below the global average of 2.9%. Also in 2024, it will grow by 2.1%, compared to the global average of 3.1%.

Brazil and Peru are the countries with the most noticeable political crises. While President Dina Boluarte seems unable to hold until the end of her original term in 2026 and keeps pushing for early elections In Peru, Brazil's Jan. 8 riots heralded a military uprising is not to be fully ruled out.