Latin America's optimism

For the first time in history, Latin America has not suffered too heavily from the consequences of an external crisis. The region has finally demonstrated its ability to show stability, resisting even during the most difficult moments of the crisis and experiencing a process of economic growth. Following the various vicissitudes the subcontinent endured throughout the past century, dictatorships, coups, debt crises, and lost decades, Latin American countries can look to the future in a different way: certainly not all economies of the countries register the same growth levels and not all behave in the same way, but overall there is a perception of optimism and a positive evolution of the political-economic-social balance.

The International Monetary Fund has projected an average annual growth rate of 4.51% for Latin America for the period from 2010 to 2015. The IMF’s estimates for Latin American countries are certainly lower than those for other macro-regions, but it is important to consider the regional disparities: some countries, such as Peru, show an average annual growth rate of 6.21%, while Venezuela’s is only 0.71%, Ecuador’s 2.21%, and Argentina’s 3.91%. In any case, GDP per capita at purchasing power parity, which stood at $11,200 in 2010, is expected to reach $14,000 by 2015: a genuine economic improvement and rise in living standards has thus taken place. After weathering the financial crisis, Latin America has entered a new phase of development that will lead to a decade of growth, with per capita income rising to levels similar to those currently seen in Eastern Europe.

There are several reasons for this evolution. Firstly, the growth of Asian countries, including China and India, of course. The prolonged and dynamic Chinese growth presents new global challenges and injects new life into the Latin American economy: the increase in demand for raw materials and energy contributes to the development of the countries that produce them. Furthermore, Chinese operations have repercussions not only on exports but also on direct investments, and Beijing's strategies are precisely geared in this direction. China therefore pulls the subcontinent and all raw material producing countries with it.

Second, greater stability and macroeconomic policy management. The wave of populism (an element that has always characterized Latin American political life), first from the right and then from the left, which hit Latin America first in the 1990s and then in the 2000s, seems (in part) to be over. Of course, not all countries are exempt from this omnipresent socio-political-cultural phenomenon, but the examples of Lula's Brazil and Bachelet's Chile undoubtedly represent an excellent precedent for the entire continent. The governments of these countries have primarily focused on implementing the necessary reforms for common development aimed at shared well-being.

Third, the improvement of social conditions. The problem of poverty has absolutely not disappeared; on the contrary, it is a very serious problem that is difficult to eradicate. But the poverty rate is decreasing thanks to economic growth and the adoption by some governments (Brazil above all) of social programs focused on education, healthcare, and the prevention of extreme poverty. The emergence of a middle class favors the growth of domestic demand and presupposes a change in the social and economic policies of countries where development is combined with stability.

Furthermore, additional measures such as better fiscal and microeconomic policies would further improve growth prospects. Latin America thus faces a decade that could definitively pave the way for its development: while forecasts are still far from those in Asia, the structural conditions are there. The path will not be easy, but the foundations that led to the election of more democratic governments have already been laid.

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