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April 24, 2009
Latin Americans keep politics out of the economy

President Alan Garcia of Peru. Peru’s GDP expanded by 9.8 percent last year — faster than China’s — but has slowed significantly.

The Latin American economy is expected to contract 1.5 percent this year as countries face losses from declining exports, tourism and remittances.

But while Iceland was called “the first political casualty of the global credit crisis” after its prime minister resigned, blogger Thiago de Aragão writes that in most Latin American countries, people seem to separate politics from their pocketbooks.

Thiago is the Latin American senior research associate at the Foreign Policy Center in London and he writes at Latin American Politican Analysis.

Latin America: Politics and Economics divided

Politically speaking, the impact of the international economic crisis is expected to be extremely relative in Latin America. Contrary to what happens elsewhere in the world, here political and economic issues are easily sifted apart. […]

There are odd situations, such as Peru. Here, in spite of the economy’s best performance ever (which may change or plunge because of the crisis), president Alan Garcia faces one of the worst cases of popularity evaluation across the whole region. In Peru we now witness an overt cleavage between economy and politics that hadn’t been seen in Latin America for a while. The thriving economy has taken the Peruvians to unprecedented wealth levels, yet their president isn’t seem as someone capable of inspiring political and institutional stability.

In Brazil things are somewhat different. Both low-income and low-middle-class populations are now entirely catered for by the country’s economy. Since these ranks of Brazil’s population have subscribed to the notion that “politicians are all the same, they all cheat”, there is nothing to be worried about if the economy is in good shape. It isn’t that president Lula’s administration isn’t a reasonable one, but significant political advancements that are yet to be made (the political, tax and labor reforms) hardly affect the vast majority of the country’s population. This vast majority of people is quite content only to be able to plan ahead the purchase of, say, a household appliance in the beginning of the year, knowing exactly how many installments they will have to pay by December.

The Brazilian upper classes are the ones that care about political issues, specially those that affect them directly, i.e. the battles for the end of the CPMF, lower excise tax for cars etc. Issues such as education, health and crime rate are lost in the political limbo. The upper classes in Brazil can afford private schools, health insurance and safe neighborhoods. Because the low-income population is living their best economic moment ever, coupled to the fact that they lack political organization to demand improvements in such critical areas, things more or less are kept going by way of compromise.

Colombia, however, is a clear example of both political and economic advancement. The country’s economy is growing steadily, foreign direct investments increase year by year, industry leaders are constantly attracted by the country’s infra-structure modernization programs. Furthermore, there has been tremendous advancement in regard to Colombia’s worst political nightmare: the FARC. Nowhere has a government managed to reap good economic and political fruits and appraisals because of good seeds sown. However, it is important to acknowledge the mounting risk that this success can be adversely affected if the Colombian president attempts at running for a third term in office.

Except for countries drowning in social issues, such as Bolivia, in Latin America economic issues have an overriding role as far as a country’s stability is concerned. In Brazil, economic issues go hand in hand with everything else for the low-income population. Because for this part of the population, “if economy is right, then everything else is right, too.” In Peru we witness a dissension in opinion, in that “economy is well regardless of the president”, whereas Colombia as a whole, or at large, in any case, including the upper classes, perceives that both economy and politics are going very well.

To read more, see the original post.

The views expressed by contributing bloggers do not reflect the views of Worldfocus or its partners.

Photo courtesy of Flickr user Presidencia de la República del Ecuador under a Creative Commons license.

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