Since the commodity boom ended four years ago, right-wing presidents are becoming the norm in Latin America. But their performance in office has been anything but stellar. Why? And what can these governments do to recover before it’s too late?
After a decade in which most countries in Latin America were ruled by left-wing governments, today only Venezuela, Bolivia and Nicaragua neatly fit into that category. In Argentina and Peru, market-friendly candidates Mauricio Macri and Pedro Pablo Kuczynski (PPK) replaced leftist leaders after elections in 2015 and 2016. In Brazil, after the impeachment of left-wing President Dilma Rousseff, her right-of-center Vice President Michel Temer was sworn in for the remainder of the term (2016-2018). Even in Ecuador, though the left retained power earlier this year, President Lenín Moreno is more moderate than his predecessor, Rafael Correa. Pre-electoral polls in Chile and Honduras anticipate new victories for the right. Though a few polls have shown that the left will have a fighting chance in the presidential election in Colombia next May, that country has not elected a true left-wing leader in the past 30 years.
The rightward electoral shift can be partially attributed to the downturn in the economic cycle and the end of the export commodity boom. After more than a decade of favorable terms of trade for Latin American countries, declining prices for commodity exports have put fiscal pressure on cash-strapped governments. Meanwhile, social needs are increasing and the demand for additional government spending keeps rising. As a result, voters have punished left-wing incumbents at the polls.
Yet, so far, the performance of their replacements has been at best mediocre and, in some cases, even disappointing.
It is true that previous, fiscally irresponsible governments left a complicated legacy. New right-wing governments, especially in Argentina and Brazil, have struggled to put the fiscal house in order and to adopt policy reforms that can help restore economic growth. Though voters have been patient, time to show results is running out. The upcoming midterm elections in Argentina in October and next year’s presidential elections in Brazil will be a difficult test.
In Peru, the story is more complicated. When he assumed power in 2016, PPK received a country in much better condition than in Argentina or Brazil. The Alan García (2006-2011) and Ollanta Humala (2011-2016) administrations were nominally leftist, but their policies were mostly market-friendly. PPK was in a much better position to show that right-wing, market-friendly presidents could put the country back on the path of sustained growth. However, after 4 percent growth in 2016, Peru’s economy is only growing at 2.6 percent in 2017.
The disappointing economic performance is partly due to the PPK government’s inability to deal with an opposition-controlled Congress. After receiving only 21 percent in the first-round vote, PPK barely made it to the runoff – which he then won by just 0.2 percent over Keiko Fujimori. But Fujimori’s Fuerza Perú (FP) party secured 73 of the 130 seats in the unicameral Congress. Since late 2016, relations between PPK’s government and the FP have turned sour, as the latter have forced his ministers of education, transportation and finance to resign. Late last month, the prime minister also quit – forcing PPK to reset his young government.
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