What you should know
- Summit of the Americas: The Biden administration announced a new economic framework for Latin America and the Caribbean (LAC), focusing on climate change, workers’ rights and supply chains.
- Food security: Guatemala, Honduras, Nicaragua and Peru will face considerable challenges in the coming months as countries deal with the global impact of the Ukraine crisis on food and fuel prices.
- ECLAC: The United Nations commission increased its projection for poverty in LAC for 2022 to 33 percent, citing economic disruptions caused by the conflict in Ukraine.
Monitoring COVID-19 economic recovery in the region
- Colombia: The peso and stock exchange closed higher on May 31, in the first session since the initial round of presidential elections/ Business-friendly construction magnate Rodolfo Hernández advanced to the run-off.
- Mexico: Financial inclusion levels have declined since 2018 despite a burst of financial startups hoping to ‘bank the unbanked’ and COVID-induced digitalization. Cash still dominates 90 percent of transactions under $25 and 78.7 percent of payments over $25.
- Ecuador: High commodity prices and returning tourism have boosted the economy, which is on track to meet IMF deficit guidelines. This year’s deficit is expected to be less than 2 percent of GDP, down from 4 percent in 2021 and 7 percent in 2020.
- Venezuela: Farmers in Venezuela are missing approximately one third of their fertilizer needs as supplies from Russia are cut off by international sanctions.
- Regional outlook: The World Bank predicts that growth in LAC will slow to 2.5 percent in 2022 and 1.9 percent in 2023 as input costs rise and economic policies tighten. Expectations in the Caribbean are more favorable, at 6.9 percent for 2022 and 6.5 in 2023.
- Argentina: The Fernandez administration suggested a new tax on companies profiting from the impact of the war in Ukraine to reduce the country’s deficit and control inflation.
- Chile: The Central Bank raised its benchmark rate 75 base points to 9 percent to confront inflation, continuing a trend of increases now amounting to 8.5 percentage points since last July.
In focus: Americas partnership for economic prosperity
President Biden will use the Summit of the Americas to launch the Americas Partnership for Economic Prosperity, a regional pact to “rebuild… economies from the bottom up and middle out.” The framework will focus on supply chain resilience, confronting climate change, and mobilizing regional investment to renew the “social contract” in the region. It will include $300 million for fighting food insecurity and more cooperation with the Inter-American Development Bank.
According to a White House press release, the Partnership seeks to reduce non-tariff trade barriers by improving customs transparency and regulation. This mirrors last month’s Indo-Pacific Economic Framework for Prosperity, but is likely to disappoint countries like Ecuador and Uruguay, whose free trade agreement (FTA) negotiations with the US have stalled.
Health + Innovation
- Pandemic response: Leaders in the hemisphere adopted an “Action Plan on Health and Resilience in the Americas” to help prevent, prepare for, and respond to future pandemic threats and other health emergencies.
- Uruguay: President Luis Lacalle Poe is the latest regional leader to contract COVID-19 ahead of the Summit of the Americas leaders meeting.
- Cuba: Officials lifted a two-year mask mandate following a successful vaccination drive that contributed to a sharp drop in cases in the last few weeks.
- Brazil: People over 50-years old are now eligible for a fourth COVID-19 vaccine shot.
Geopolitics of vaccine donations: US vs. China
- The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.