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25/11/2008 | Latin America- Downturn may raise public pressures

Oxford Analytica Staff

The latest annual poll by Latinobarometro, a Santiago-based research organization that has surveyed public attitudes in Latin America since 1995, was carried out in September and early October before the full extent of the current international economic crisis was apparent.

 

However, its results, together with a study -- Beyond the Facts: Understanding Quality of Life -- released recently by the InterAmerican Development Bank (IDB), provide an indication of the pressures the region's governments will face as the effects of the crisis begin to be felt.

Economic expectations. Unrealistic expectations are a particular concern as the region faces a downturn in economic growth. Over the past five years Latin Americans became accustomed to expecting an ever brighter future, making next year's weaker outlook an unwelcome shock.

Moreover, Latinobarometro suggests they are ill-prepared for the crisis, partly because -- with some justice -- their leaders have insisted that the region's current account surpluses, higher international reserves and stronger fiscal finances put it on a better footing to face adverse external conditions than, for example, in the Asian crisis of late 1990s. Policy options. According to the recent IDB study -- which compares the objective indicators of a country's income, health and educational standards with subjective perception of these standards -- satisfaction with life is not necessarily correlated with per capita income. It found that satisfaction with quality of life is higher in Venezuela, Guatemala and Brazil than in, for example, more prosperous Chile and Argentina.

On the basis of these findings, it identified an "unhappy growth paradox" under which increased material expectations and competition for economic and social status mean that people in countries with rapid growth tend to be less satisfied than those with a similar income level that have grown less. As a result, the report warns that economic policies that seek merely to maintain growth may not be politically sustainable.

State role. Even before the recent bank bailouts in the United States and Europe, Latin Americans were strong believers in the economic role of the state, suggesting an additional source of pressure on governments as the effects of the international crisis become apparent. A vast majority of the region's inhabitants consider that services such as healthcare, drinking water, electricity, pensions and education should be controlled by the state. Indeed, in Argentina, Chile and Uruguay, 90% consider that pensions should be state-controlled (Argentina has recently announced their re-nationalization).

Underlying problems. Satisfaction with the results of democracy, as opposed to support for democracy, remains relatively low in Latin America. According to Latinobarometro, it reached just 37% in 2008, mainly due to the region's socioeconomic inequalities:

• According to the survey, 70% of the region's inhabitants continue to believe that their country is governed for the benefit of a few powerful groups, rather than in the interests of all (a figure that reaches 89% in the Dominican Republic and 88% in Peru).

• Only 21% of the region's inhabitants consider that social inequalities have diminished while 48% consider they have shown no change.

As Latin America prepares for a new period of elections between 2009 and 2011, in which 14 countries will choose new presidents against a probable backdrop of slower economic growth, citizens are likely to become increasingly vociferous in demanding greater guarantees of social equality.

Oxford Analytica (Reino Unido)

 


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