Latin America's Challenging External Environment: Old and New Forces

Looking ahead, Latin America faces no shortage of policy challenges, and many (if not most) of these have domestic economic and political roots. The problems confronting individual countries vary markedly in origin, nature, and severity, so it would be misleading to discuss many of these at the regional level. The economic implosion inflicted on Venezuela by Maduro’s dictatorship registers on a separate scale, not only in comparison to the rest of the region but in the global and historical experience by almost any metric. Meanwhile, Brazil’s new government is attempting to tackle a daunting and worsening fiscal problem that is unsolvable without substantive pension reform. Argentina’s central bank continues to battle the old demon of chronic high inflation. Mexico’s new president has raised alarms among global investors about his “market-friendliness.” Despite these and other substantive differences across national borders, however, there is considerable common ground across the region in the challenges posed by the changing external environment.