Latin America's leaders have been tested by the global context – but their response could see better cooperation and regional integration

As the world has begun to recover from the effects of COVID-19, the severe consequences of the aggression against Ukraine is the next global shock. The Latin American region is not immune to the upheaval that characterizes this complex and challenging global context.

The most recent growth projections for the region in 2022, have been adjusted downwards by financial institutions, estimating between 1.8% and 2.4%, on average. While recognizing the individual characteristics of regional economies, they are all inescapably exposed to similar external factors that continue to exacerbate inflationary problems, increase volatility and increase financial pressures.

As a result of the impact on production and trade with the countries involved in the war, there has been an increase in the prices of hydrocarbons, and raw materials, particularly agricultural products and fertilizers. Additionally, the projections of lower growth of the main trading partners in the region - the United States, China and the European Union - affect external demand. These emerging conditions together with the existing supply-chain vulnerability and high transport prices generate greater complexity and uncertainty.

In addition to the tighter monetary policy measures, the inflationary shock already reflected in rising energy and food prices requires immediate measures to mitigate the foreseeable socio-economic effects and prevent a new threat to food security that would mainly affect the most vulnerable groups, and that could trigger new social tensions.

In addition, it should be noted that, although vaccination rates have been significantly increased, the pandemic remains a focus. It is necessary to maintain in parallel, therefore, a vision where persistent structural deficiencies that have affected Latin America for decades remains at the forefront.

During Davos 2022, we are seeing the participation of important leaders from business, governments, international organizations, civil society and notable young Latin Americans to discuss the main challenges facing our region. The aim is to coordinate responses that allow us to address the multiple challenges we face, optimizing the vast natural capital and valuable human resource of our region.

A secure energy transition based on affordability and diversification, and expansion of renewables has great potential in the region. The economies through digitalization and digital inclusion are attracting significant capital flows and is recognizing the creative and innovative force in the region and boosting entrepreneurship, trade and investment, efficiency in agriculture and food security. Safeguarding the sustainability of the Amazon with innovative solutions to environmental challenges and the development of the bioeconomy are just some of the issues on our regional programme.

This agenda is framed against a fluid geopolitical context, and in regional circumstances characterized by the uncertainty caused by another intense electoral cycle, the concern of many in the face of the deterioration of democracy in some countries of the region and recurrent social tensions.

Faced with a volatile and complicated global reality and with reduced fiscal space, a more vigorous public-private collaboration is necessary. We will also address the concept of Stakeholder Capitalism and its practical application in the regional corporate world through the introduction of a framework of environmental, social and governance (ESG) metrics aligned with the seventeen UN Sustainable Development Goals. The contributions of the private sector in these areas of common interest are highly valued in accordance with new international standards.

In addition to the availability of international financial resources and monetary policy adjustments, timely policies will be required to mitigate the risks exposed and extraordinary strategies to protect the most vulnerable groups.

The responses demanded by this complex context cannot be based on populist rhetoric but require a substantial political dialogue that tempers polarization and ideological divisions and allows for broad consensus.

The quality of Latin American leadership and the resilience of our region is being tested in this critical context and provides a new opportunity to renovate trust, promote better local cooperation and greater regional integration. Collective action is key to responding to emerging challenges more effectively and to boost economic recovery without neglecting the long-term vision that allows progress towards sustainable and inclusive development in the Latin American region.