Emerging Risks In Latin America In 2022

Summary

• Latin America will start 2022 in a very fragile position given the economic fallout from the Coronavirus disease 2019 (COVID-19) pandemic, a deteriorated fiscal position, weak FDI, and the erosion of real wages due to high inflation.
• The strong economic rebound in the second half of 2021 is likely to slow in 2022, not least because of rising policy rates (notably in Brazil).
• Business uncertainty will be compounded by tightly contested elections in major countries (Colombia and Brazil) where marked policy shifts appear to have significant probability; the victory of the left in Chile further compounds uncertainty.

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Economic rebound will likely lose momentum due to tighter monetary policy, declining real wages, and a deteriorating political environment for businesses.

Following a partial regional rebound in 2021 from the COVID-19-induced recession, external demand will be the