The COVID-19 epidemic has impoverished Latin American societies that are now suffering with rising prices – especially in food and fuel – this escalation of inflation drives protests and strikes against governments that are historically fragile, with no margin to answer. Added to this, the war in Ukraine led to a rise in the value of commodities, which increased even more food and fuel prices. Currently, several Latin American countries are immersed in social and political crises, which may spread to the rest of the region.
In Ecuador, President Guillermo Lasso has managed to escape – until now – the risk of destitution, after indigenous movements stopped the country for 18 days until an agreement was sealed. During the protests led by the Confederation of Indigenous Nationalities of Ecuador (Conaie), military convoys and embassies were attacked; roadblocks, as well as tolls were set up by demonstrators to control traffic in large cities. Moreover, these actions led to shortages in supermarkets. The agreement signed with the government provides, among other measures, fuel price reduction – one of the lowest prices on the continent.
In Peru, more protests were called mainly in the transport sector against the already vulnerable Pedro Castillo government, also demanding cheaper fuel.
In Argentina, several acts against the government have already taken the streets. Protests take place at a time when the Argentine economy is weakened, with inflation reaching almost 60% a year, and the dollar, which governs popular economy, soaring at more than twice the official rate. In Buenos Aires supermarkets queues are gigantic and prices readjusted every week. It’s the most dramatic case in the continent because on top of the economic crisis, the country lives a political crisis. President Alberto Fernandez and key components of his coalition had a disagreement about which path to follow.
Inflation rates
Experts agree that inflation will last at least three or four years. Rising inflation deepens social discontent. Making even new governments, like that of Gabriel Boric in Chile, quickly lose strength. The question remains whether Latin American political systems will be able to respond to the demands made by increasingly impatient social actors.
All this turmoil has experts who monitor levels of support for democracy on high alert. Given this scenario, specialists from the Economic Commission for Latin America and the Caribbean (ECLAC – UN) propose the use of measures aimed at strengthening public revenues. And also, the use of tools to contain inflation, such as tax interest rates, in order to minimize the negative effects on growth and investment.
