2021 Covid surging in 1H and inflation swelling in 2H have contributed to the political pendulum swinging hard left in LatAm. More structurally, the commodity super cycle unwind mid last decade and the political discontent likely set the entire shift in motion. Against the general trend, some elections cycles moved in the other direction as well.
2021 was an intense and dramatic year for the LatAm region with Covid surging in 1H, inflation swelling in 2H and the political pendulum swinging hard left for chunks of the year. While the former two likely contributed to the latter’s leftward shift cyclically, the longer in duration structural decline caused by the commodity super cycle unwind mid last decade likely set the entire shift in motion. The strong public discontent with the status quo resulted in Peru’s anti-establishment vote in favour of its first ever (hard) left president while Chile’s demand for change loaded the constitutional assembly with the left leaning independents and the highest office in the country going to a Leftist too. In Brazil and Colombia, which are yet to hold elections in this cycle of elections, left aligned presidential candidates (Lula and Petro) are clearly leading in the polls.
But while the general political trend throughout the region has been surprising to the left, there have been some course inflections and corrections in the other direction as well. In Mexico’s mid-term elections held in June, AMLO’s ruling coalition lost the qualified majority (and power to amend the constitution) while Castillo’s first cabinet saw a reshuffle in a more moderate direction after a very erratic couple of months. In Brazil, Lula is flirting with an idea of adding a centrist name to his presidential ticket which could suggest a more pragmatic policy direction if elected. But the biggest turn to the right took place in Argentina where the opposition won decisively the October mid-term elections and the ruling coalition lost the Senate majority for the first time since 1983. We discuss LatAm’s 2021 political events in more detail and take a sneak preview of the ones awaiting us in the new year below.