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South America is experiencing one of its most difficult periods, as Brazil, Argentina and Venezuela succumb to social, economic and political turmoil. Venezuela’s national struggles have spilled over, affecting the security and economies of its southern neighbors as uncertainty pertaining to the Brazilian elections have impacted other economies and Argentina’s economic debacle has destabilized countries like Paraguay, Uruguay, and Bolivia. Despite each country’s unique predicament, the development of these crises has had a domino effect in the region, leading to an overall economic decline in South America.

Halfway through the first decade of this century, these three countries enjoyed economic and social stability, creating a prosperous time in the region; but everything changed after 2011 when these countries began to experience what we see today as a regional crisis.

South America received one its biggest blows when Brazil, which represents roughly 34 percent of the Latin American economy, began to experience economic and political problems spurred by the Lava Jato corruption scandals. These scandals would later lead to the impeachment of not only Brazil’s former president, Dilma Rousseff, but also resulted in the impeachment of the Peruvian president, Pablo Kuczynski, and the trial of former Ecuadorian president, Rafael Correa, on corruption charges. Affected by the plummeting of commodity prices, fiscal deficit, and corruption, Brazil would later start to see the effects of a serious economic crisis. As a result, Brazil’s GDP decreased by 7.4 percent between 2015-2016 and it caused a 0.47 percent contraction in Latin America’s growth (2016).

In this context, Brazil’s economic effects in times of crisis spread like tentacles across the region affecting the development, production, and growth of other countries. For example, Argentina experienced a slowdown in exports and production, especially in the car industry during the 2015-2017 period. The former Argentinian Minister of Foreign Affairs, Susana Malcorra, said “If Brazil sneezes, we [Argentina] have pneumonia” in order to explain the correlation between Brazil’s and the region’s problems.

Corruption scandals, growing unemployment rate, and insecurity have led to the polarization of this month’s presidential election. Right-wing Jair Bolsonaro and leftists Fernando Haddad are heading into one of Brazil’s most controversial elections, as the candidates present opposing policies on how to solve the Brazilian crisis. What is sure is that the uncertainty surrounding Brazilian politics will persist even months after the elections. Without the resolution of Brazil’s economic and social problems, its South American neighbors will continue to suffer the consequences of the Brazilian Real’s fluctuations and political uncertainty.

Meanwhile, Argentina’s crisis is reminded of the chaos of the 2000’s crisis as President Mauricio Macri maneuvers through a political drama to exit a new economic crisis. This year, Argentina was hit by the worst drought in the last 50 years affecting the country’s agricultural trade which represents 30 percent of Argentina’s exports. In addition, failed austerity measures, political drama, corruption, and international trade wars sank the Argentinian peso, making it lose between 50 percent of its value against the US dollar in the first half of 2018. As a result, international investors have lost trust in Argentina which unleashed the current economic debacle. As a result, Macri requested $50 billion from the International Monetary Fund (IMF) in order to avoid a default. Argentina ended up receiving a historical loan of $57 billion.


Nota completa aquí

Jueves, Octubre 25, 2018