Economics takes a back seat to politics

The past month in Latin America has seen economics take a back seat to politics. The good news has come from Argentina, where the inauguration of Mauricio Macri as president has buoyed both hopes for reform as well as financial markets. Investors also cheered a thumping victory for the opposition in legislative elections in Venezuela earlier this month. But hopes that this could pave the way for a shift towards more market friendly policies, as in Argentina, seem premature. And with oil prices falling further over the past month, the country’s economic crisis looks set to deepen. Finally, Brazil has fallen deeper into the political quagmire with the news that the lower house of Congress will begin impeachment proceedings against President Rousseff. For now it seems that the president can muster sufficient votes in Congress to survive. But her support base is faltering and, if nothing else, the political wrangling that looks likely to ensue over the coming months will detract from efforts to pull the economy out of its current tailspin.