OBELA Analysis

The world economy came to a standstill during the second quarter of 2020, when different governments imposed various measures of productive shutdown and social distancing around the world. This caused aggregate demand and supply to grind to a halt, causing the European Union's GDP to fall -6.12%, the G7 -2.10% and Latin America -7.01%.

In the face of the COVID-19 crisis, fiscal and monetary stimulus was expanded in almost all Latin American economies, with the aim of boosting recovery, although not all countries responded immediately.

In Ecuador, Mexico and Paraguay, the implementation of a small economic package was accompanied by increased economic activity. The COVID-19 crisis has shown that the speed of GDP recovery led by foreign trade is faster in the context of falling imports.

As the world economy moves towards a new normality, a stage of profound international transformations is approaching. In the face of these changes, what can international relations and our Latin American countries expect after the first 100 days of his term in office?

Biden presented Interim Strategic National Security Guidance (INSSG) and his Build Back Better (BBB) agenda comprised of three parts: rescue, recovery and reconstruction. Together, the blueprint comprises federal spending of more than $6 billion dollars, the largest in its history.

The BBB agenda, despite its huge budget, and the INSSG project, will face the structural limits of the U.S. economy and the accelerating global transformations led by China.

Globally, the use of cryptocurrencies is on the rise. In Latin America there has been an increase in the use and awareness of new digital currencies.

There are different ways of looking at the causes of the increase in the use and acceptance of cryptocurrencies in Latin America: accessibility due to their anonymity; the security they generate among citizens due to the economic crises in their countries; and the incentives they offer to evade institutions.

The depreciation of the dollar due to expansive monetary policies is leading to this currency being abandoned as a reserve currency in some countries and, above all, is in the process of opening a large market for these cryptocurrencies.