Inflation will continue to be the biggest obstacle that the countries of the Latin American subcontinent have to overcome. At least the most immediate. This is not the case only because of the perverse effect it generates on the quality of life of the population of each country, but because there is no more powerful element than runaway prices to pierce the attachment of citizens to their rulers. The electoral value that this has for each nation makes inflation the first of the economic policy objectives of the 26 countries that make up this geographical area.
Each of the finance ministers of our countries, meeting a few days ago in Panama, had to listen to the lapidary report from the Inter-American Development Bank in which it was argued, with hard data, which should be the most important projects to be developed in each country. None are saved.
The other great objective to be undertaken by the region as a whole is to reduce public debt, but this will have to wait in most of them. This is how those who make decisions in the upper echelons of power will tend to see it, and mainly in those countries governed by left-wing political forces.
But the reality is that the consequence of the imbalances that the region faces should make every government lose sleep: Latin America, according to the IDB, will barely see its economy expand by 1% in 2023. This, of course, does not take into account other crises that are in full swing and that have worsened after the IDB report was presented, such as the ups and downs of the stock market on a planetary scale. There are reasons to think, then, that this scenario managed by the Inter-American Development Bank is an optimistic one.
The comment that this level of expansion is too low for the needs of the region, strike. And also the explanation that the reason for the poor regional growth is attributable to causes beyond our geography. The dramatic reality is that if a titanic effort is not made in each country to rein in the economy, by the end of this year our social problems – poverty and social inequality mainly – will see themselves catapulted to unsuspected levels.
Of course, there are new elements that must be considered and that will impact the performance of each country in Latin America and the Caribbean, without any of them having the capacity to maneuver to correct them. We talked about the pernicious effects of the war in Ukraine on the cost and availability of energy on the planet, the distortion of supply chains, the scarcity of products of all kinds in international markets and, above all, the possibility that the United States experiences a greater contraction of its variables and must face more unemployment and higher inflation. If these imponderables were to take place, it would not be possible to speak of inertial growth in the region, but quite the opposite: an inertial decrease of 1.5%.
Blaming third parties for national ills in this scenario is not sensible because it neither resolves the internal distortions that impact the governed nor does it create a better environment for the ruler in question. Not assigning importance to the external debt variable, what it does is spread the wrinkle for another time, but not dedicating itself tenaciously to correct the escalation of prices seriously threatens political continuity as a direct consequence of the deterioration of the social fabric. Neither of these two tasks can be postponed.