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It's Not Just Your Pocket. Inflation in Latin America Worries the World

Factors such as the pandemic, the different social outbreaks that have developed in many countries in the area and the war in Ukraine are the causes that could explain the high inflation in Latin America .

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LatinAmerican Post | Nicolás Donoso Álvarez

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Leer en español: No es solo tu bolsillo. La inflación en Latinoamérica preocupa al mundo

Among many cracks left by the coronavirus pandemic after more than two years since its inception, without a doubt one of the ones that perhaps hits hardest is inflation. And it is that the generalized increase in prices in many of the goods and services has penetrated deeply into an unstable economy such as Latin America, and where inequality seems to deepen despite the fact that the sanitary measures to combat the coronavirus little by little they have relaxed and with it people have gradually resumed their lives as they knew them before 2020.

According to the analysis carried out by the International Monetary Fund (IMF), for this year they forecast a 2.5% growth for Latin America and the Caribbean . Although this figure is somewhat better than the 2.4% projected at the beginning of the year, it is insufficient and is considered the slowest rate among the emerging and developed regions of the world. It is even behind a large part of Europe despite the fact that the old continent has been directly or indirectly affected by the sanctions that the West has imposed on Russia for its invasion of Ukraine.

While according to the American financial advisory company, Bloomberg, inflation should reach 10% in Latin America in 2022 , although it could drop to 7.1% in 2023. To date, Venezuela presents the highest inflationary value, since the Consumer Price Index (CPI) reached 222.3%, followed by Argentina with 58.0%, Brazil with 11.8%, Chile with 10.5%, Nicaragua with 10%, among others. For its part, Colombia ranked ninth at the Latin American level with 9.2%.

An Unestable Region

The economic crisis brings with it multiple problems in a region characterized precisely by insecurity and constant hesitation. Perhaps the sector where many have been harmed during the pandemic is that of unemployment. The International Labor Organization (ILO) revealed that, despite the fact that an unemployment rate of 9.6% was registered during 2021, lower than that of 2020 (10.6%); it is a lower number than 8% of 2019.

In other words, prior to the pandemic, the situation was much more auspicious, and this is mainly explained by the fact that the pandemic had not hit the world and that although some countries such as Ecuador, Chile and Colombia experienced their own "outbursts and social crises", growth continued its course and the consequences of these events that paralyzed those nations could not yet be clearly appreciated.

On the other hand, worrying data are those provided by the United Nations Children's Fund (Unicef), until September 16, 2021, when the immunization process was progressing unevenly in the area and when many educational establishments maintained a virtual class modality while others opted for hybrid classes, about 86 million boys and girls were not going to school . Although a slightly more hopeful figure is related to the 47 million schoolchildren who had resumed their studies in person.

Uneven situation in different countries, but with a common denominator . Another amount that confirms the grim picture is the one broken down by the United Nations Organization (UN), where they point out that "hunger increased more drastically than any other region between 2019 and 2020 (in Latin America), reaching 59.7 million people, its highest point since 2000.

Possible Solutions

Talking about possible alternatives or paths to consider appears to be very complicated, but there are some possibilities that must be taken into account. Experts agree that poverty, inequality and instability are the main headaches for Latinos and, in turn, the most relevant concerns. One solution could be that the governments of the day seek to encourage the generation of formal jobs , and support both small and medium-sized companies as well as the most vulnerable and disadvantaged sectors that have been affected to a greater or lesser extent in recent years.

Another variable to consider is that the vaccination process against covid-19 has to continue advancing in the region, in order to encourage the return to face-to-face classes in a total way of the students, and more if one takes into account that Many people do not have the minimum guaranteed conditions to be able to carry out classes from their homes. The lack of necessary implements, the distractions and the lack of connectivity make it even more difficult for the boys and girls who are expected to be the future of the world, and this includes, of course, economic matters.

Finally, to control inflation, programs that invest in health, education and society in general must be sought , but in a responsible manner and maintaining a balance. In Latin America that is almost impossible, but it is the only way to avoid receiving another blow from inflation. And boy, in recent times the continent has known one blow after another, almost as if it were a domino effect.