Political Risk in Latin America: Back to the future?

Latin America has experienced a diffi cult period since 2014. The slump in commodity prices has impacted activity via several channels (such as lower investments, export revenues, and a tighter
public budget). After two years of recession, the region’s GDP growth fi nally rebounded in 2017 by an estimated 1.1% year-on-year, and is expected to gain further traction in 2018 (growth forecast: +2.4% YOY). However, this optimistic outlook is linked to favourable global trends than domestic merits. Although a still-gradual tightening monetary cycle in advanced economies (especially in the United States), as well as a soft deceleration in China and the resulting improvement in commodity prices, has aided Latin America, the poor political environment has stained the region’s image in the eyes of much-needed foreign investors – particularly with the multiple political and governmental corruption scandals since 2014.