Latin America will have to brace for more turbulence in 2020

Thu, 12th Dec 2019

The EIU has scored 18 countries in Latin America on seven indicators we deem to be the most relevant in determining the likelihood of social unrest in the region. Our research show that having strong social safety nets, robust democratic traditions and relatively adequate youth employment opportunities are all factors that mitigate the risk of large-scale popular protests. Meanwhile, extremely high levels of income inequality, poor government effectiveness and perceptions of rampant corruption tend to contribute to public disaffection.

Key figures include:

Countries across Latin America—from Bolivia to Chile—have been roiled by political turmoil in 2019. Although each episode of social unrest is clearly distinct from the other, the roots of public frustrations across the region lie in dysfunctional political systems and economic malaise.

The problems faced by countries across the region are structural and, with a few exceptions, governments lack the fiscal and institutional capacities to sufficiently address citizens’ concerns. Consequently, Latin America will remain a breeding ground for political unrest.

According to the “political instability risk heat map” developed by The Economist Intelligence Unit , the preponderance of Latin American countries are at “moderate” or “high” risk of facing renewed volatility in 2020.

Fiona Mackie, The EIU’s Regional Director for Latin America and the Caribbean, says:

“In many ways, the story of Latin America is one of dashed expectations. The 2000s commodities supercycle ushered in an era of plenty; it led to a rapid expansion of the middle class and the enfranchisement of many politically disadvantaged groups. However, when the commodities boom ended in 2014, what followed was years of economic stagnation, an explosion of corruption scandals and, in some notable cases, democratic backsliding. In that sense, Latin America has been a ticking time bomb, just waiting to go off, for some time now.” Fiona Mackie, Regional Director for Latin America and the Caribbean

The heat map below shows that Nicaragua is the country with the greatest number of potential flashpoints (Venezuela was excluded from the sample owing to inadequate data availability), followed by Guatemala, Brazil, Honduras, Chile, Mexico and Paraguay. Uruguay, by some distance, stands out as the country with the fewest potential flashpoints for unrest.

Predicting political turmoil in any given country is a challenging task and some caution is needed in the interpretation of the heat map. In some countries a single issue could serve as a flashpoint for popular protests. This appears to have been the case in Bolivia, for example, where political instability has resulted from a constitutional crisis, driven in turn by a flawed electoral system. Elsewhere, it may take many triggers for there to be a significant risk of political upheaval. For instance, in Brazil and Mexico, the issues highlighted in the heat map have already resulted in the election of anti-establishment governments that may be given a bit more room for manoeuvre by voters in 2020 before unrest takes hold.

Source: The Economist Intelligence Unit

To read the full findings download our full report: Where next and what next for Latin America?