Instability, apprehension, conflict and fear: these are the words Canning House used to describe the world as it heads into 2024. In its outlook report for next year, the nonprofit specialized in Latin America highlights that the region has remained largely invisible to the main areas of angst grappling the world.
The report says this is a good thing, finding silver linings in the many challenges the region faces: There are no nuclear powers, declared or covert. There is certainly violence, but it is based primarily in criminality rather than ideology, and is not exported through terrorism. There is corruption and there are authoritarian leaders, but overwhelmingly Latin Americans live in genuine democracies, characterized by open, civic cultures. There is real poverty, but functional states and rising living standards provide a framework for its on-going alleviation," reads a paragraph of the report.
Canning House had also said there is no "realistic current anxiety about wars between two nations." This claim is being somewhat challenged as the Venezuelan government escalates its rhetoric about annexing the Essequibo region in Guyana, and the latter's heightened state of alert, which has included joint military drills with the United States.
Beyond this last area and its potential ramifications, Jeremy Browne CEO of Canning House, emphasizes that overlooking the region would be a mistake for Britain "due to its commitment to open democracies, political and economic liberalism, and significance in the fight against climate change." "The region becomes crucial in the global geopolitical battle between democracies and autocracies, with a deep-seated commitment to democracy and liberal values," he claims.
The report goes on to provide an outlook for different areas of interest: politics, economy, trade and security, among them. At a general level, it mentions a "renewed sense in Washington, Brussels and London of the region's strategic importance."
"Rising great power competition and the scramble for scarce natural resources have fueled a somewhat belated recognition among US and European policymakers that the region will matter more to the world over the coming decades than it has over the past one," the report says.
However, it recognizes that during this period China has greatly increased its presence in the region, especially by expanding trade, investment and influence. "In 2000, Latin America's total trade with China was a relatively insignificant USD $12.5 billion; by 2021 it had grown to USD $450 billion," says the document to illustrate its claim.
This scenario can present an opportunity to Latin America to "use its newfound geopolitical leverage to negotiate advantageous deals with the West, China and new actors such as India and the Gulf states" as the world "fragments into less predictable blocs.
When delving into the political scenario, the report predicts that "most of the governments across the region will face challenges to their governability and ability to implement key reforms needed to reduce poverty, alleviate the economic burden on social and welfare systems, and promote growth and investment – all while generating a broad social consensus."
"Unable to satisfy demands from a variety of constituencies, social tension may rise and periodically manifest itself in the shape of occasional bouts of unrest across the region," the authors predict. Some examples mentioned are the discontent with Argentina's establishment that propelled Javier Milei to the presidency, challenges faced by Brazil's Luiz Inacio Lula da Silva to balance diverging political and financial demands and the continued shockwaves from 2019's social unrest in Chile.
Here's what the report says about other key areas for the region as it heads into 2024:
Commercial Landscape and Economic Prospects
Despite political complexities, Latin America's potential in this area remains intact, the document says, focusing on its growing middle class, a population of 650 million, and an appetite for international expertise. The UK's accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is seen as a strategic move, unlocking new trade possibilities with Latin American countries.
The report also focuses on "Multilatinas," multinational companies from Latin America, saying that "for those who want to enter or grow in a Latin American market, whether
in tech or an aligned sector, understanding the profile and advantages of a Multilatina can arguably enhance the possibilities for partnership."
Economic Resilience and Challenges
Despite global economic challenges, many Latin American economies have shown resilience, navigating external pressures and avoiding crises. While some countries experience a deceleration in growth, others, like Chile, Colombia, and Peru, are expected to improve. However, Argentina is singled out as its macroeconomic imbalances pose continued challenges there.
Security Concerns and Organized Crime
Latin America grapples with persistent security concerns linked to organized crime, leading to high homicide rates and societal unrest. Challenges persist in addressing crime, corruption, and social conflicts. The region's role as a key player in illicit drug markets, compounded by economic hardships and corruption, poses ongoing security threats, says the report.
"Widespread economic hardship in Latin America, which became particularly acute during the pandemic, lured more individuals into organized crime. Meanwhile, the prevalence of corruption in the region has allowed an array of illicit markets to take root," it adds.
Social, Environmental, and Climate Challenges
At a social level, the region faces concerns related to crime, violence, corruption, education, and healthcare. Trust in institutions remains low, and despite progress in reducing poverty and unemployment, there's skepticism about the effectiveness of the socio-political system.
The overall sentiment that one's country is moving in the right direction varies between countries in the region. This is particularly true of Mexico and Brazil, where optimism is
much higher than both the regional and global average. Chile and Colombia remain more in line with the global average, whilst optimism amongst citizens in Argentina and Peru remains very low," the report details. It also points out lagging education as a point of concern, as well as "inadequate infrastructure and a lack of efficient public funding needed to drive the improvement in productivity the region is looking for."
On the environmental front, Latin America struggles to take a leadership role in climate action, with deforestation emerging as a significant challenge.
A Pivotal Role Awaits Latin America
As the world navigates the intricate landscape of 2024, Latin America remains poised to play a pivotal role, the report concludes. With its stability, commitment to democracy, and economic potential, the region offers an untapped opportunity for global collaboration. Whether addressing geopolitical challenges, fostering trade partnerships, or combating climate change, Latin America's role is more crucial than its current visibility suggests.
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