Trump, AMLO and Bolsonaro, a new landscape for 2019
In 2017, an interesting survey indicated that 75% of Latin Americans showed little or no confidence in national governments, up from around 55% in 2010. Trust in institutions like the judicial system also deteriorated as dissatisfaction with the quality of public services grew, in a context of social inequality and corruption.
In 2018 the Mexican Andres Manuel Lopez Obrador, AMLO, and the Brazilian Jair Bolsonaro (right) were elected because the population rejected their traditional leaders and governing parties (PRI and PT). Similar causes have been generating opposite solutions and violence threaten to develop dangerously.
Venezuela and Honduras populations have fallen into desperation and the disastrous socio-economic situation of those two countries have pushed immigrants on the road together with “maras” and delinquents, threatening neighbouring countries and the US border. Trump policies have contributed to exacerbate nationalism, populism and anti-imperialism. All in all, corruption and violence have created a dangerous political framework at the end of 2018.
In Colombia, Ivan Duque, newly elected president, wants to renegotiate the fragile peace treaty with the guerrilla forces and in Peru, the new president’s priority is the fight against corruption. Surprisingly Bolivia, one of the poorest countries on the continent, governed by its “leftist” indigenous president Evo Morales, has legalised work for children from 10 years of age and the Nicaraguan revolutionary regime had to fight agains a popular protest like any military dictatorial one. Therefore Chile, Uruguay, Costa Rica and Panama appear as heaven.
In that context, the Economic Commission for Latin America and the Caribbean (ECLAC) have reviewed its growth projections for the region for 2018 and expects an average expansion of 1.3% in Latin America and the Caribbean this year, slightly lower than that forecasted this past August (1.5%). It foresees a growth rate of 1.8% for 2019.
Argentina remains very fragile. Despite Macri’s policies to reduce deficits and access financial markets, rising interest rates in the US have had an immediate impact on exchange rates while imported inflation and budget deficit fed a new monetary crisis, bringing the country back to the edge of bankruptcy.
In Brazil, Paul Guedes (Chicago boys’ school) should strongly support the private sector in 2019, AMLO has promised to eradicate inflation and reduce government spending. Their respective radical positions will likely vanish as a necessity of governing and we can expect positive economic results if they are able to reduce corruption and support a social programme needed to tackle inequality.
There is no improvement to expect in Venezuela until Maduro is put aside. In that context, inflation might increase, interest rates will certainly follow the general trend in the world and most currencies will depreciate against the dollar.
Nevertheless, slow growth and financial uncertainties will not stop fleet management expansion into the corporate markets because it is a way to increase eciencies, secure budgets and reduce costs. It is even more required when the context is complicated.