The Economist - USA (2022-06-11)

TheEconomistJune11th 2022 TheAmericas 35

painfulmeasures.ThegovernmentsofCo­
lombiaandChilearemaintainingsubsi­
dies,whileinPeruthegovernmenthasre­
ducedtheconsumptiontaxonfoodand
energy.AcrossLatinAmerica,politicians
havetakenmeasuresworthabout0.3%of
gdp, on average,to try toshieldhouse­
holdsfromtheeffectsofthewar.
Notallisrosy.Evenafteritsupwardre­
visions,theimfexpectsLatinAmericato
growmoreslowlythisyearthananyother
part oftheemerging world, apartfrom
easternEurope.Brazilwillprobablystrug­
gletogrowbymorethan1%thisyear,de­
spitehighcommodityprices.Costlyfood
andenergy,thoughhelpfultoexporters,
arefanninginflation.Consumerpricesare
risingatdouble­digit ratesinChileand
Brazil,andarewellabovecentral­banktar­
getsinLatinAmerica’sotherlargeecono­
mies.Centralbankershaveputupinterest
ratestopreventsurgingpricesfromtrans­
latingintoa broaderlossofconfidencein
governments’ control over inflation—a
meaningfulriskina regionwitha history
ofspirallingprices.Buthigherratesalso
squeezeinvestmentandgrowth.
Conditionsmaydeterioratefurtherif
inflationinricheconomiesprovesmore
persistentthanexpected,forcingcentral
bankstoraiseratesbymorethanmarkets
anticipate.Inthe1980s,whentheUnited
Stateslastbattledtosubdueseriousinfla­
tion,theconsequencesforLatinAmerica
weregrim:a waveofdebtcrisesandaneco­
nomiclostdecade.Macroeconomicpolicy

acrossthe Americashas improveda lot

sincethen.Butthecombinedpressureof

multipleshockstodayhasleftsomeecon­

omiesvulnerable.

Theregioncannotaffordanothercrisis.

LatinAmericasuffereda largerdeclinein

gdpin 2020 than anyotherpartofthe

world.Thepandemicresultedinforgone

investment, missed hours of schooling

andweakerproductivitygrowth. Thisis

likelytodepresseconomicgrowthinthe

yearsahead;indeed,theimfreckonsthat

in 2024 outputacrossLatinAmericawill

probablyremainabout5%shortofthepre­

pandemic trend. Recent hardships have

fallenhardestonthepoor.

In countries plagued by extreme in­

equality,suchunevenlydistributedcosts

couldaggravatepoliticalinstabilityorex­

tremism. Elections in Colombia this

monthandinBrazilinOctoberseemcer­

tain to yield winners who are poorly

equippedtomeetthechallengesofthemo­

ment.Andifgovernmentsremainunable

todeliverrelieftostrugglingLatinAmeri­

cans—atallordergivenglobalheadwinds,

highcommoditypricesornot—thenfrus­

trationacrosstheregionwillonlygrow.n

A mixed picture

Latin America

Sources:HaverAnalytics;RefinitivDatastream

12

10

8

6

4

2

0

2020 21 22

Consumer prices, % increase on a year earlier

Mexico Peru

Colombia

Chile

Brazil

130

120

110

100

90

Jan Feb Mar Apr May Jun

Currencies against the $, January 3rd 2022=00

Brazilian real Peruvian

sol

Colombian peso

Chilean

peso

Mexican peso

Canada

A politer kind of populism

O

n a sundayin April 600 people packed

into the Elks Lodge on the outskirts of

North  Bay  in  northern  Ontario.  Some  had

driven  hours  to  hear  Pierre  Poilievre,  the

only  Canadian  politician  who  sets  pulses

racing these days. Cars bore bumper stick­

ers that read “Freedom Convoy 2022”, a ref­

erence  to  protests  against  vaccine  man­

dates led by truckers that shut down Otta­

wa,  Canada’s  capital,  for  three  weeks  in

February. “Defund the cbc”, Canada’s pub­

lic  broadcaster,  demanded  a  sign  held  by

an  eight­year­old  boy.  One  man’s  t­shirt

proclaimed  him  to  be  a  “Thought  Crimi­

nal”. But many looked like mild­mannered

folk  with  time  to  kill  between  attending

church and visiting their grandchildren.

Blue­shirted  and  tieless,  the  43­year­

old Mr Poilievre warmed up the crowd like

a  late­night  talk­show  host.  He  cracked

jokes  before  laying  into  the  country’s  Lib­

eral  government,  led  by  Justin  Trudeau.  A

proposal  to  regulate  content  on  the  inter­

net  befits  the  regimes  of  North  Korea  and

Iran,  Mr  Poilievre  fumed.  Inflation,  the

worry  uppermost  in  voters’  minds,  is  a

form  of  oppression.  “You  might  be  the

working guy who has lost his freedom to go

on  a  hunting  or  fishing  trip  on  the  week­

end  because  gas  prices  are  a  buck­ninety­

three a litre and you can no longer fuel up

your  truck,”  he  speculated.  When  he  is

prime minister Canadians will be “the fre­

est people in the world”.

Before that, however, he has to become

leader  of  the  Conservative  Party  in  a  vote

scheduled  for  September  10th.  Polls  sug­

gest  that  he  is  the  front­runner.  He  is  the

hard­edged,  plain­speaking  antithesis  of

many Canadian politicians. “Pierre is real.

He’s a breath of fresh air,” said Nancy Olm­

sted,  a  former  Olympic  canoeist  who  at­

tended the event in North Bay. 

When  Mr  Trudeau  was  elected  prime

minister in 2015 he was the breath of fresh

air. Possessed of Kennedyesque charisma,

he offered moderately progressive answers

to  grievances  about  economic  insecurity.

But Mr Trudeau has become a symbol of di­

visions he had hoped to narrow. His atten­

tiveness  to  the  concerns  of  vulnerable

groups,  from  indigenous  people  to  trans­

gender  folk,  has  made  some  ordinary  Ca­

nadians feel that he cares less about them. 

Things came to a head during the truck­

ers’  protest,  when  Mr  Trudeau  accused

protesters  of  promoting  “hatred  and  divi­

sion”,  a  charge  that  misrepresented  many

of  them.  He  appalled  civil  libertarians  by

invoking the Emergencies Act for the first

time  in  its  34­year­history,  allowing  the

government  to  restrict  assembly  and

freeze  bank  accounts.  Two  inquiries,  one

in Parliament which is already under way,

and another led by a judge, will investigate

whether  the  government  was  right  to  in­

voke the act. 

As elsewhere, voters are shocked by in­

flation, too, which reached 6.8% in the year

to  April,  its  highest  level  in  more  than  30

years. On June 2nd Doug Ford, whose Pro­

gressive  Conservative  Party  is  the  provin­

cial  counterpart  of  the  Conservatives  in

Ontario, won re­election as the province’s

premier in part on a promise to “keep costs

down”.  As  worrying  to  many  is  the  rise  of

nearly  50%  in  house  prices  since  early

2020, though these have begun to fall since

the  Bank  of  Canada  began  raising  interest

rates in March (see Finance section). 

Mr Poilievre seeks to convert unease in­

to  anger.  A  politics  nerd  who  has  been  an

mp since he was 25, he adopts a Trumpian

swagger  on  the  stump.  He  rails  against

N ORTH BAY, ONTARIO

Pierre Poilievre is Canada’s answer to Donald Trump