South America, with Lula, Brazil returns to the left like Chile and Colombia: the challenges are inflation, climate and Russia

With Lula’s victory in Brazil, the continent returns to progressive traction: only Ecuador, Paraguay and Uruguay still have right-wing governments. But watch out for the traps for Lula and the crisis in Argentina

Progressive treble in Latin America. In the last 12 months alone, the South American continent has dyed red in three out of three elections: in Chile a year ago the 36-year-old socialist won Gabriel Boric; then Colombia with the first left-wing president in its history, Gustavo Petrowho narrowly defeated the conservative Alvaro Uribe, who came to power for the first time in 2002. Just as he narrowly won in Brazil Lula (also elected for the first time 20 years ago), scoring his personal treble: no Brazilian president had ever obtained a third term.

The former union leader made it with 50.9%, the lowest percentage ever, even if he got over 60 million votes, also a record. And with her exploits, greeted not by chance with enthusiasm throughout South America, the so-called URSAL (acronym, in Portuguese, of União das Repúblicas Socialistas da América Latina) made the en plein: after a long period of mainly right-wing governments in the area, today also considering Mexico and Venezuela, there are 8 countries governed by the left, i.e. all those of continental South America with the exception of Ecuador, Paraguay and Uruguay, and including Peru, where since July 2021 the trade unionist governs Pedro Castillo.


In this context, what are the economic situation and the international positioning of Latin America? Starting from the Brazil of the newly re-elected Lula, who will take office from January 1, 2023, the markets and the international community seem to be in favor of the turning point: although the 77-year-old leader of the Workers’ Party has expressed ambiguous assessments of the war in Ukraine (it is no coincidence that he received congratulations from both Zelensky and Putin), his return on the saddle of the first economy in the area has received strong acclaim from the Western world, starting with Biden and Macron.

Brazil is looking forward to returning to count in the international context, but Lula – as well as with the ambiguity towards Russia – will also have to deal with a your country’s growing dependence on China, which for years, amidst general indifference, has been putting its hands on South America and in particular on Brazil, which in 2021 was the country in the world that benefited from the most investments started from Beijing: almost 6 billion dollars to acquire companies o finance projects in all sectors, from oil to fintech, from infrastructure to automobiles. Not to mention soy, the raw material exported from Brazil, especially to Asia.


Markets currently approve: the Brazilian currency, the real, is strengthening against the dollar and the euro, while the Ibovespa index of San Paolo, after the collapse in the aftermath of the vote is progressively rising, even if it is still far from the highs of May 2021. There is an air of change at all levels, as if a part of the country (actually not so majority) does not looked forward to catching up with the rest of the world, after years of blunders and slips. The first test is in the next few days there COP 27 conference on the climate of Sharm el Sheikh, where Brazil will want to play a leading role especially on the theme of the Amazon, whose deforestation under Bolsonaro has advanced to unacceptable levels. First positive sign: Germany, which had suspended the Fundo Amazonia aid program, has reinstated it.

However, it will not be easy for Lula to put the country back on its feet, recently returned to the UN Hunger Map (estimated 33 million people at risk of malnutrition): Bolsonaro, underlines Folha de San Paolo, is “politically alive and socially normalized” , and the new government will struggle to find a majority at the Federal Congress, to the point that Lula will be mathematically forced to forge alliances with the Centrão, a center container that is still an ally of the outgoing president to this day.


And the other countries? The hot topic in South America is always that ofinflation. Brazil for 2022 estimates a 9.4%, a figure in line with Petro’s Colombia (which has the record for unemployment: 11%), while Boric’s Chile is far worse off, which after having received the rejection of the The new Constitution foresees 11.6% higher prices this year and again 9% in 2023, when Brazil and Colombia will drop below 5%. Leaving aside Venezuela, which is experiencing a situation of its own, the laggard on the continent remains theArgentinaalso led since 2019 by a left-wing government: the president Alberto Fernandez he was among the first to congratulate comrade Lula, but his country is going through the worst crisis since the corralito, twenty years ago.

Inflation this year in Argentina is estimated at 72% and in 2023 it is even expected to worsen to 76%. Growth is also disappointing: + 6.5%, but from 10.5% in 2021. And it is no better for Brazil, which this year according to the IMF will grow less than Italy and the Eurozone, under 3% . Even the Mexico, which with Andrés Manoel López Obrador (theoretically left-wing but often accused of conservative policies) was a candidate to become the new locomotive of Latin America, in 2022 will see GDP rise by only 2.1%, to slow down again in 2023 to 1.2%. There Latin American left it is awaited by a historic challenge: today it governs in countries that together account for 93% of the area’s GDP.

South America, with Lula, Brazil returns to the left like Chile and Colombia: the challenges are inflation, climate and Russia – FIRSTonline