The left have been in power in Argentina, Brazil, Chile and Venezuela for some years now and new left leaders ascended to power recently in Bolivia, Ecuador, Nicaragua and Uruguay. Although this movement is not homogeneous at all (there are huge differences between Venezuela’s Hugo Chávez, Argentina’s Kirchner, Nicaragua’s Ortega and Brazil’s Luiz Inácio Lula da Silva, Chile’s Bachelet), the continental pattern is clear.
The amazing rise in this tendency is caused by popular frustration incremented by the failures of the neo liberal wave that was supposed to catapult the region toward development. Despite the enormous achievements of these governments in controlling inflation, the promised development did not happen, and more over the population felt betrayed because corruption and a weak and a government controlled justice system were the biggest legacy this governments left in the region.
This frustration opened the doors of power to the left. Initially the government programs have been very moderate avoiding some of the biggest mistakes and some of the past results are impressive and the future looks even more promisory:
Brazil:
Brazil is the 10th largest economic power in the world with a 600 billion dollars GDP. The restrictive monetary and budgetary policies set up by the Lula da Silva government, have restored markets confidence but have restrained growth : GDP growth rate was 0.5% in 2003, 5.2% in 2004 and 3.3 in 2005.
Indicators
2002
2003
2004
GDP (USD billion)
460.8
505.7
604.9
Real GDP growth (constant prices)
1.9 %
0.5 %
5.2 %
GDP per capita (USD)
3560
3536
3675
Inflation rate
8.4 %
14.7 %
6.6 %
Unemployment rate
9.2%
9.7%
..
External debt (USD billion)
229
235
..
Real rate on 12/31 (1 US$)
3.5425
2.903
2.6615
Sources : IMF - 2005 data, World bank, Oanda
Brazil’s 2006 economic indicators and forecast [1]:
Key indicators
2006
2007
2008
2009
2010
2011
Real GDP growth (%)
3.7
3.9
3.7
3.6
3.7
3.6
Consumer price inflation (av; %)
4.2
3.3
3.7
4.0
3.8
3.7
Total public-sector budget balance
-3.0
-2.4
-2.1
-1.6
-1.2
-1.1
Current-account balance (% of GDP)
1.2
1.0
0.5
0.3
0.4
0.5
SELIC overnight rate(av; %);(d)
15.3
11.9
10.0
9.80
9.5
9.5
Exchange rate R:US$ (av)
2.18
1.97
1.88
1.93
1.99
2.05
Argentina:
2005, GDP growth rate was 7.5% in 2005. The Argentinian economy is obviously reviving since 2003, In 2003, GDP growth rate was 8.8% , 9% in 2004. Peso devaluation has re-launched exports, mainly of agricultural products. Industrial production is being rehabilitated.
Indicators
2002
2003
2004
GDP (USD billion)
102.0
129.6
151.5
Real GDP growth (constant prices)
-10.9 %
8.8 %
9.0 %
GDP per capita (USD)
6453
6957
7511
Inflation rate
25.9 %
13.4 %
4.4 %
Unemployment rate
19.6%
15.6%
..
External debt (USD billion)
150
166
..
Argentina Peso rate on 12/31 (1 US$)
3.39
2.94
3.0083
Sources : IMF - 2005 data, World bank, Oanda
Argentina’s 2006 economic indicators and forecast[2]:
Key indicators
2006
2007
2008
2009
2010
2011
Real GDP growth (%)
8.5
7.6
5.4
3.8
3.7
3.4
Consumer price inflation (av; %)
10.9
9.6
12.1
10.3
8.2
6.9
Budget balance (% of GDP)
1.8
1.2
1.0
0.4
0.3
0.0
Current-account balance (% of GDP)
3.8
3.0
2.3
1.8
1.5
1.1
Lending rate (av; %)
8.6
10.5
12.0
11.5
10.0
9.0
Exchange rate Ps:US$ (av)
3.1
3.1
3.1
3.2
3.2
3.2
Venezuela:
After experienced in 2004 one of the strongest growth in the American continent, Annual GDP growth rate was 17.3% in 2004, 9% in 2005. The country should go back to a sustained growth, thanks to oil exports.
Indicators
2002
2003
2004
GDP (USD billion)
92.9
83.4
109.3
Real GDP growth (constant prices)
-8.9 %
-7.7 %
17.3 %
GDP per capita (USD)
4377
3968
4575
Inflation rate
22.4 %
31.1 %
21.7 %
Unemployment rate
15.8%
16.8%
..
External debt (USD billion)
34
35
..
Bolivare rate on 12/31 (1 US$)
1392
1599.5
1920
Sources : IMF - 2005 data, World bank, Oanda
Venezuela’s 2006 economic indicators and forecast[3]:
Key indicators
2006
2007
2008
2009
2010
2011
Real GDP growth (%)
10.3
5.2
2.8
3.1
2.9
2.8
Consumer price inflation (av; %)
13.7
18.2
22.9
15.6
14.0
13.6
Budget balance (% of GDP)
0.0
-4.1
-4.4
-2.1
-1.6
-0.8
Current-account balance (% of GDP)
14.9
7.6
5.0
2.5
0.6
-1.5
Commercial banks' prime rate (%; av)
15.5
15.5
15.7
16.0
17.0
17.0
Exchange rate Bs:US$ (av)
2,147.0
2,147.0
2,700.0
3,204.2
3,662.5
4,158.3
Exchange rate Bs:€(av)
2,695.9
2,920.2
3,732.8
4,213.5
4,678.8
5,239.5
Chile:
The Chilean economy is one of the most performing in Latin America, GDP growth in 2005 was 5,9% and 6.1% in 2004. The mining sector is the main asset of the economy, and Chile benefited from the raw material's price increase, especially copper.
Indicators
2002
2003
2004
GDP (USD billion)
67.4
72.4
94.1
Real GDP growth (constant prices)
2.2 %
3.3 %
6.1 %
GDP per capita (USD)
5089
5196
5448
Inflation rate
2.5 %
2.8 %
1.1 %
Unemployment rate
7.8%
7.4%
..
External debt (USD billion)
41
43
..
Chile Peso rate on 12/31 (1 US$)
696.5
617.4
574.99
Sources : IMF - 2005 data, World bank, Oanda
Chiles’s 2006 economic indicators and forecast[4]:
Key indicators
2006
2007
2008
2009
2010
2011
Real GDP growth (%)
4.0
5.8
5.1
5.0
4.8
4.9
Consumer price inflation (av; %)
3.4
2.6
3.1
3.1
2.9
2.9
Central government balance (% of GDP)
7.7
5.5
3.6
3.2
3.5
3.4
Current-account balance (% of GDP)
3.6
3.5
2.2
-0.3
-3.2
-4.2
Short-term lending rate (av; %)
8.0
8.0
8.2
8.4
8.4
8.4
Exchange rate Ps:US$ (av)
530.3
526.2
522.3
533.7
546.6
559.9
It would be a mistake to think that all these governments are currently on track, in many cases in spite of the economics result the real changes haven’t happened yet and the frustration of the population is mounting. Latin America’s resurgence have been impulse due to favorable international circumstances, from low interest rates in the United States to heightened demand from China and India. After experiencing little or no growth between 1998 and 2003, the region’s economies have taken advantages from the high price of oil (Argentina, Ecuador, Mexico, Venezuela) and other commodities like soybeans (Argentina, Brazil). But investment levels are still low. In order to compete in the global economy, Latin America’s left have dismantle the government structures that punish enterprises not close to the government, and helps government affiliate corporations through legal privilege, mocking the notion of equality before the law.
Meanwhile the population in the region is living through more promises of equality in terms of social mobility and opportunities that would provoke another major disenchantment in the population. In the meantime the Latin America’s left is just making promises that hardly can be fulfilled.
I would like to give you what I know about Venezuela, since I don't think it fits smoothly with either the statement about the people choosing left, nor the proposed economic growth. As said previously, corruption is the game, I spent January-May 2008 in Venezuela, and not only have I been made aware that Chavez too too stole the elections, but the economy beyond the oil industry is stagnant, with 60-80% unemployment, those who don't support Chavez have been blacklisted from opening a bank account, getting loans, credit, and there is a tight restriction on the value of imports and exports allowed per person per year which is about $200.00 american, much of the commerce that thrived before was redistributed equally amongst select appointed government officials.
Just wanted to throw that in there, beyond that, I think the format and style of the article is impressive, or beyond my scope of knowledge.
Posted by Hana R. Grover, on 10/13/2008 at 23:28
It is my humble understanding that economies such as those of Venezuela can only enjoy sustained growth for a limited amount of time. The growth we see, is undermined by the vast corruption that permeates the Latin-American landscape which, like a pyramid, can only be sustained for a limited amount of time. The resource rich countries, such as Venezuela, will only enjoy growth while the resources are easily corruptible; as they become more scarce, so shall the flow of illegal contributions to government officials - hence deflating the growth. Leftist governments in Latin-America will never survive long-term standings and will implode into economic recession and misallocation of resources and capital.
Posted by Dr. Euribiades Cerrud II, on 12/28/2007 at 15:52
Some modifications where made based on previous comments...
Posted by German Gonzalez, on 08/22/2007 at 17:34
:
Initially the government programs have been very moderate avoiding some of the biggest mistakes and some of the results are impressive:
Only the first column contains results, the rest are forecasts. Some historical data would be needed to make an evaluation of the impact of each government.
:
Latin America’s left have dismantle the government structures that punish enterprises not close to the government, and helps government affiliate corporations through legal privilege, mocking the notion of equality before the law.
I understand that a 'not' is missing between 'have' and 'dismantle' [sic] in order to have a coherent sentence
Posted by César, whose homepage is here on 08/19/2007 at 12:03
I recommend you 'The Return of the Idiot', Plinio Apuleyo Mendoza, Carlos Alberto Montaner y Álvaro Vargas Llosa. With prologue of Mario Vargas Llosa.
