With the world economy still sluggish, Latin America will stand out as a relatively bright spot—but not as shining as it should be. In a year of few big elections, governments will have an opportunity to push on with reforms, which some, notably Mexico, will take. And there is a good chance that Colombia’s FARC guerrillas will at last agree to demobilise.
Economic growth in Latin America will be solid rather than spectacular, at between 3.5% and 4%, barely up on the 3.1% of 2012. The uptick will come mainly from recovery in Brazil, where growth should return to around 4% thanks to a combination of lower interest rates and cuts in business and consumer taxes. Peru, Chile and Colombia will once again grow above the regional average. Latin Americans will cast an anxious eye at China, for many now their biggest single trading partner. Any sign of a Chinese slowdown turning to slump would send the prices of the region’s commodity exports tumbling. Conversely, an uptick in Europe and the United States would boost spirits.
At home, upping the tempo requires productivity-inducing changes. In that regard, much attention will be paid to whether Enrique Peña Nieto, taking over as Mexico’s president on December 1st 2012, can push through sweeping changes to allow private investment in energy, starting with natural gas, deep-water oil and refining (see his article in this section). The prospects are good, provided Mr Peña’s Institutional Revolutionary Party can strike deals with the conservative National Action Party. In Brazil, Dilma Rousseff will focus on implementing promised contracts for much-needed private investment in infrastructure.
Of the bigger countries, only Chile faces a presidential election in 2013, in November. This will see a close race between the centre-left Michelle Bachelet, a former president, and Laurence Golborne, for the governing centre-right alliance. A new law makes electoral registration automatic, swelling the potential electorate by more than half. But voting is now voluntary, and apathy may help Ms Bachelet. Among the smaller nations, in Ecuador Rafael Correa will win another term in February against a divided opposition, thanks to the popularity bestowed by an oil boom and social spending. April will see a presidential election in Paraguay, in which the conservative Colorado party will probably return to power. Following the election, Paraguay will be restored to membership of the South American Union and the Mercosur trade group, from which it was suspended after the impeachment of Fernando Lugo in June 2012.
The best news of 2013 may well concern Colombia
In Argentina, 2013 will be a make-or-break year for the president, Cristina Fernández. At a mid-term congressional election, probably in October, she will seek to get within striking distance of the two-thirds majority required to change the constitution to allow her to stand for a third consecutive term. Her main hope is that a bumper grain harvest and Brazil’s reviving economy will loosen a foreign-exchange squeeze and head off recession. But if she falls short, popular discontent at inflation may boil over into protests on the streets.
In March the Falkland Islands (population: 2,600) will vote overwhelmingly to stay a British overseas territory in a referendum aimed at convincing the rest of Latin America to respect self-determination and drop its backing for Argentina’s claim to the archipelago. But that will be hard work, especially if further oil deposits are found off its shores.
Chronicle of a death foretold
In Venezuela Hugo Chávez will start a new six-year term in January buoyed by his electoral victory in October, but facing uncertainty over his health and the need for austerity after his spending binge in 2012. The man to watch is now Nicolás Maduro, Mr Chávez’s new vice-president. The opposition will hope to build on its respectable showing in the presidential vote in an election for state governors in December 2012. Reform in Cuba may take a leap forward, having slowed in 2012. Fidel Castro has defied many predictions of his mortality, including those of this publication. But in 2013 his luck, and long life, will at last run out. His death will free his brother, Raúl, Cuba’s president, to broaden Cuba’s incipient private sector.
The best news of 2013 may well concern Colombia. President Juan Manuel Santos will hope that the peace talks he has launched with the FARC will end the oldest guerrilla insurgency in Latin America, dating from 1964. The government wants the talks, taking place mainly in Havana, to end well before the campaign for the May 2014 election (at which Mr Santos can seek a second term). For the FARC, the incentive is to reach a peace deal in time to allow it to take part in that election.
Michael Reid: Americas editor, The Economist
Source link: http://www.economist.com/news/21566312-businesslike-year-beckons-latin-americas-new-normal