Political risks coming to the fore

Political risks have intensified in the Andes this month, which could be part of a broader trend throughout the region. In Colombia, the protests against tax reforms have pushed policymakers away from the fiscal austerity measures required to repair the public finances. Meanwhile, the result of Chile’s Constitutional Convention election has opened the door to more radical proposals entering the new charter. Elsewhere, elections in Mexico and Peru next month may result in a shift towards more interventionist policymaking, while populist measures could emerge in Brazil ahead of next year’s general election. These political concerns are likely to put Latin American financial markets on the backfoot over the coming months.