Summary
Alejandro Werner, founding director of the Georgetown Americas Institute, and Pedro Casas Alatriste (G'22), former president of the Latin American Policy Association at Georgetown, co-authored a paper that discusses Latin America's economic performance in 2021 and challenges foreseen for 2022.
Latin America's Economic Outlook and Policy Challenges
Author: Alejandro Werner
Latin America had a surprising yet insufficient economic recovery in 2021, leaving us with deep scarring from the COVID-19 crisis. Several factors explain why in 2021 Latin America had an economic performance significantly better than expected at the beginning of the year. On the external side, the better-than-expected performance of the world economy, commodity prices, and remittances played a major role. Domestically, a slower-than-expected fiscal stimulus withdrawal and a faster than originally anticipated vaccination campaign contributed to significant growth in domestic demand and in the reopening of the service sector. During 2022, Latin America will have to deal with three important macroeconomic challenges: fiscal sustainability, inflation control, and tightening international financial conditions. This environment will call for skillful political leadership to forge broad national agreements that allow for sustainable public finances broadening social risk-sharing and public goods.