US (Washington Insider Magazine) – Harsh Times, a novel recently released by Mario Vargas Llosa, examines the economic disparity of Guatemala. The novel is a fictional telling of how the United States government reacted to Guatemalan labor and land reform, set before and after 1954. The president at that time, Jacobo Arbenz, was deposed by a CIA mission. The U.S. government had political oversight of Guatemala after Arbenz was removed from office, in a series of regimes that resulted in torture and genocide for Guatemalan people.
Guatemala is just one example of a country that has suffered from the United States governmental and economic control. The continent was largely affected by agriculture, being its number one industry, countries depended on it. This resulted in a smaller middle class and uneven distribution of property. The United States government was able to operate Latin American countries in whatever way they saw fit.
Latin America depends on imports from other countries despite the surplus of natural resources available in many of its countries. In recent years, the demand for Latin American commodities has declined. Coupled with a decline in the tourism industry, financial impacts on Latin America could be devastating. A study by McKinsey Global Institute found that just 23 cities were accountable for generating trillions in growth and profits that would go to urbanization. Two of them─ Mexico City and São Paulo─ are located in Latin America.” This paints a negative outlook for a continent that could be thriving under better economic circumstances.
Global inflation is raising the prices of commodities, making it possible to grow the economy again. When the United States experiences inflation, Latin America must follow suit to manage debts. Deloitte and other entities believe that global policy changes will result in tighter pocketbooks, which may result in higher interest rates as well as organizations struggle to compensate. This will impact Latin America, which relied on countries with more economic stability during the pandemic. Though prices on commodities will increase, so will the pressure for Latin American countries to pay back their debts.
Argentina and Brazil are two of the region’s most indebted countries. The outlook for 2022 is uncertain, given a recent election and the impact of COVID-19 to the nation’s debt. Even though the Argentinian government paid $1.9 billion to the International Monetary Fund, to settle on debt owed to the United States of $44 billion, the region’s hopes of economic recovery and growth are fragile.
Overall, the impact of global energy prices pushed inflation to record heights. Latin America also suffers from climate conditions, where many of its residents are exposed to natural disasters that topple the region’s structural and economic stability. As the United States recovers from COVID-19, it causes emerging countries in Latin America to struggle with billions in debt, lack of job opportunities, and political unrest. Elections in Brazil, Chile, Colombia, and Costa Rica leave an uncertain outlook for the future.
