Risks and opportunities 2021: Latin America
The pandemic-induced recession is the steepest on record and recovery in 2021 will be muted
Source: IMF World Economic Outlook October 2020; Oxford Analytica Map styling: ‘Wargames’ by Daniel P. Huffman via Project Linework
Outlook
Latin America has been the region hardest hit by COVID-19, especially the three largest economies, Brazil, Argentina and Mexico. Public reactions are mixed; while Mexican President Andres Manuel Lopez Obrador’s party looks set to do well in midterms in 2021, Argentine President Alberto Fernandez will lose congressional seats.
The economic approach has also varied widely, with the largest emergency support scheme in Brazil. Spending by left-of-centre governments in Argentina and Mexico has, somewhat surprisingly, been far more modest. This points to a milder contraction in Brazil, but sustained recovery will require continued hefty welfare programmes.
Impacts
- Recovery next year will make up far less than half the ground lost in the three largest economies this year.
- Mexican and Argentine policies and attitudes to foreign investors may curb investment prospects.
- Argentina-Brazil differences and EU pushback on Brazilian environmental policy will delay any EU-Mercosur accord.
See also
- Latin American recovery will not offset 2020 GDP drop - Feb 9, 2021
- Latin America food exports to Gulf will expand further - Jan 13, 2021
- Prospects for Mexico in 2021 - Nov 17, 2020
- Prospects for Brazil in 2021 - Nov 9, 2020
- Prospects for Argentina in 2021 - Nov 5, 2020
- More graphic analysis