How Latin American can navigate global risks and emerge stronger

The World Economic Forum’s Annual Meeting 2023, under the title “Cooperation in a Fragmented World,” takes place during a complex geopolitical and economic period. It is marked by the continued war in Ukraine, geopolitical tensions, high inflation, fear of economic recession in the world’s largest economies and an escalation of social protests worldwide. Climate change will also feature high on the agenda amid deadly storms and floods in California and one of the worst energy crises in Europe’s history.

While Latin America is not exempt from the effects of these compounded crises, recent events, including China’s reopening and US inflation seemingly nearing its peak, begin to offer some hope.

Latin American economies are heterogeneous, yet the region has yet to escape tightening global financial conditions, depreciating local currencies and high inflation, affecting essential goods beyond food and energy.

The region’s economic growth in 2022 is estimated to have been 3.6%, driven by consumption and recovering labour markets. However, due to heavy debt burdens and weak investments, among other factors, growth is forecasted to be 1.3% in 2023 and 2.4% in 2024. Gross domestic product (GDP) growth for 2022 was higher by 0.5 percentage points than projected in July, reflecting stronger-than-expected activity in the first half of 2022 on the back of favourable commodity prices and competitive exports.

Representatives of 11 Latin American governments, including the Presidents of Colombia, Costa Rica and Ecuador and the Dominican Republic vice-president, will be present in Davos, together with ministers and state governors from Brazil, Mexico, Guatemala and El Salvador, Honduras, Panama and Peru. The new president of the Interamerican Development Bank and the executive director of the United Nations Economic Commission for Latin America and the Caribbean will also attend.

These countries’ nationals from among business, civil society, academia, media and youth leaders, as well as those from Argentina, Chile, Paraguay and Venezuela, will participate in important discussions related to global and industry challenges. They will delve into the region’s political, social, economic and environmental context to consider its risks and challenges. Most importantly, however, they will seek sustainable solutions to address them.

The most recent political turmoil in Peru is putting the resilience of its democracy to the test. Meanwhile, the attack against government buildings in Brazil’s capital peaked months of rising political tension, although the Brasilia riots offered an unexpected opportunity to bring democratic leaders together to reject extremism and violence and reaffirm their commitment to democracy and the rule of law.

Chile will face another phase in its constitutional reform process and general elections will occur in Paraguay, Guatemala and Argentina in 2023. Columbia’s President Gustavo Petro’s plan for “total peace” and the resumed political talks among Venezuelans will continue to create expectancy in the region’s exhilarating political agenda.

Poverty, lack of socioeconomic mobility, gender inequity and public insecurity continue to be pervasive in most of the region while acting as push factors for migration. However, new initiatives are afoot to address the root causes of migration in countries of origin by promoting investments and business opportunities to enhance their socioeconomic conditions and environmental resilience.

For example, the Partnership for Central America is leveraging the sub-region’s competitive advantages, including the opportunities for nearshoring, while catalyzing human and economic development conditions. In addition, with the World Economic Forum, a new initiative to disseminate “stakeholder metrics” is being planned for local corporate leaders to measure and report their companies’ social, environmental and governance contributions and commitments.

Latin America plays a central role in global efforts on sustainability. Harnessing the region’s green economy and its potential to provide environmental services to the world while advancing social development requires a long-term vision and coordinated leadership in business, government and social sectors.

At the same time, the region is home to more than 30 million people living in the Amazon, the Earth’s largest rainforest and the world’s richest biological reservoir. The absence of immediate action on ecosystem degradation will affect the lives of its inhabitants and the stability of global climate systems. The possibility of enabling the bio-economy of the Amazon to deliver sustainable benefits for people and the planet is encouraging, especially as new governments have adjusted priorities and announced promising plans.

A new wave of political change is increasing attention on Latin America, where ideological shifts, polarization and domestic and global pressures are straining the region’s capacity to deliver on key social, economic and political expectations. And most analysts are forecasting another lost decade for Latin America. Urgent measures to tackle the unsettling current circumstances will require dynamic consensus-building in highly polarized societies.

We hope that these pressing processes pave the way for responsible leaders to engage in sustained dialogue and adopt public-private cooperation as an effective path to address both immediate needs and structural deficiencies, so Latin America comes out stronger in the long term to prove forecasts wrong.