What you should know
- Food insecurity: According to the World Food Programme, 14 million people across 13 LAC countries will reach extreme food-insecure status in 2022 amid the ongoing global food security crisis exacerbated by inflation and the war in Ukraine.
- Colombia: On June 19, Gustavo Petro was elected as the first leftist president ever, marking a shift away from the country’s decades of political traditions.
Expert take: What a Petro administration means for Colombia’s economy
Gustavo Petro’s victory marks a turning point in Colombia, a traditionally conservative country where consecutive governments have focused on tackling insecurity and violence. Though the Colombian economy has bounced back from the pandemic, informality and inequality levels remain high. Nearly half of the population—and nearly 60 percent among the poorest—think the country’s economic outlook is getting worse. Petro’s economic plan includes structural reforms designed to promote a more inclusive and environmentally responsible economy.
President-elect Petro’s fiscal priorities includes a tax reform that would increase tax collections by 5 percent by taxing wealthy landowners and eliminating tax exemptions/benefits for companies. On the energy front, Petro’s plan to ban oil and gas exploration could create a large fiscal vacuum by depriving Colombia of nearly half of its export revenue. Other significant reforms may include extending subsidies for low-income people, making the government the employer of last resort, and land reforms.
A main immediate priority for the incoming administration will be to safeguard Colombia’s economic recovery. Since 2020, increases in unemployment and informality pushed 3.5 million households into poverty. Amid rising food and fuel prices coupled with global supply chain disruptions, inflation rose to 9.2 percent in April—a 21-year high. While Colombia’s economy is set to grow 5.8 percent this year, the fastest among major Latin American economies, Petro will have to navigate a complicated road ahead, especially given a divided Congress likely resistant to radical reforms.
Monitoring COVID-19 economic recovery in the region
- Ecuador: The Ministry of Energy and Mines declared force majeure to the country’s entire hydrocarbons value chain amid nationwide strikes and protests. Economic loss stands at $17 million since the protests started due to 609 halted oil wells.
- El Salvador: The value of its $105 million investment in Bitcoin fell by more than 50 percent.
- Mexico: AMLO criticized the central bank’s interest rate increases, which are expected to continue next week to curb inflation.
- Dominican Republic: Economic growth is expected to reach 5 percent in 2022, despite 9.5 percent inflation and nearly $950 million spent on food and fuel subsidies since 2021.
- Argentina: Wheat harvest costs have risen by 40 percent, driven in part by fertilizer shortages.
- Brazil: Inflation reached 11.7 percent in May. The central bank once again increased interest rates by .5 percent while promising further hikes to combat rising prices.
In focus: Ecuador’s economy
Ecuador’s economy looked strong earlier this month, with the government on track to outperform its deficit guidelines. However, political instability undermined that forecast after the country’s foreign bonds lost nearly 17 percent of their value over the past month.
Protesters demanded fuel subsidies and a stop to privatization, and mining and oil projects. In addition to protest-induced road closures, demonstrators forced the state oil company to temporarily cease production. In response, President Lasso offered increased payments to the poor, fuel and fertilizer subsidies, and loan forgiveness.
Health + Innovation
- 11 percent: The increase in COVID-19 cases in the Americas over the past week. At least 11 countries and territories have yet to reach 40 percent vaccine coverage.
- Barbados: Prime Minister Mia Mottley is the latest regional leader to test positive for COVID-19.
- Colombia: President Iván Duque announced that the COVID-19-induced health emergency measure will be lifted as of July 1, 840 days after it was first declared in 2020.
- Mexico: Foreign Minister Marcelo Ebrard is the latest Mexican cabinet member to contract COVID-19.
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.