It is undoubtedly are a cause of widespread concern.
For years we have witnessed flows of economic migrants towards Europe, with growing difficulties of management, legislation and a surge in social costs. What is happening in Latin America, with the flight of millions of people from Venezuela, deserves careful reflection, because the temptation of many to ride the "migrant emergency" by diverting political attention from the need for economic reforms will lead to permanent damage for civil society.
Faced with the largest exodus in the region in the last fifty years, the parallelism with the migration crisis from Africa to the EU brings out points of contact, but above all confronts irreversible damage to world growth and the political and economic stability of many more or less emerging countries.
THE “SOVEREIGN” BOLIVAR
In a period of difficulty for the emerging markets, with outflows resumed from the end of July, the countries experiencing the political problem of migratory flows suffer evident effects on the local financial markets. It also happens in Latin America, where an emergency situation is opening up which is getting worse due to the umpteenth outstretched intervention last August 18 by President Maduro on the Venezuelan economic reality - already compromised - where basic necessities are lacking, from medicines to primary goods.
With the issue of the new "sovereign" currency, the bolivar soberano, not only are five zeros abandoned but the Venezuelan currency is linked to a phantom economic plan that should revive the country from the economic abyss in which it finds itself. This new monetary reconversion takes place in a period of galloping hyperinflation and the announcement of a 34-fold increase in the minimum wage has not changed the feeling of prostration of the people. In Maduro's unreal vision, the new bolivar thus devalued will be pegged to the national cryptocurrency, the petro, which is in turn tied to the price of barrels of oil. But that does not exempt the IMF from predicting a dramatic new spike in Venezuelan inflation to one million percent by the end of the year.
The JP Morgan emerging market currency index sees the performance in euros heavily negative (-17% in just over 16 months), while the MSCI sees the emerging stock exchanges down by 8% and risks revising the lows of the year to 1015. And the carry trade, as demonstrated by the emblematic Turkish case, certainly does not compensate for the slide in the currency and shares.
THE VENEZUELAN EXODUS WEIGHTS ON ALL LATAM
The Venezuelan exodus with 2,5 million fugitives in less than three years recalls similar situations experienced in Africa: migrations from Sudan, for example, are putting a strain on all neighboring countries.
To stem the effects produced by the Venezuelan crisis, President Temer in Brazil has instructed the army to restore order in the northern areas, where refugees are creating difficult situations with the local population and are weighing in terms of growing social costs and increased unrest.
From Mexico to Peru, from Chile to Colombia and up to Argentina, there is no country that has not been hit by this unexpected wave of migration.
The Ecuadorian government had to block the entrances and the Peruvian government in September will block the entrances which follow each other incessantly at the rate of 5 a day.
Chile with its thriving economy has become an irresistible pole of attraction: 5% of the population is now represented by foreigners and there are more than 300 illegal immigrants. Thus the Chilean government is now not satisfied with a passport but demands a certificate of clean criminal record.
Meanwhile, from Nicaragua, after the clashes last April, tens of thousands of inhabitants are fleeing. They seek refuge in Costa Rica, which until now has welcomed them with great generosity. Refugees who in this case, as in Haiti, have so far been welcomed and tolerated but by now the situation has become unmanageable despite the good will shown above all by the Colombian government, which hosts 800 Venezuelans, in not wanting to restrict and limit reception as in other countries that were already confronted with the ups and downs of the Brazilian economy and a new worsening of the endless Argentine crisis.
Argentina is the model student of the International Monetary Fund, but in urging Lagarde for the release of loans, it has once again discovered very weak cards in the eyes of foreign investors, increasingly fleeing emerging markets and unwilling to restore confidence in a chronically ill person more dependent than ever on international funding. Meanwhile, the peso has lost 108% since the beginning of the year and the regional context will hardly help new investments.
The migratory pressure of Venezuelans and Nicaraguans in countries with a delicate economic balance generates an increase in crime and a wave of xenophobia in the Latin American region - as demonstrated by the demonstrations in Costa Rica - which recalls what is happening in Northern Europe, and in particular in Germany, where extreme parties are gaining more and more support.
HEAVY ATMOSPHERE FOR THE BRAZILIAN ELECTIONS
Elections will be held in Brazil on 7 October, where the historic Workers' Party (PT) is coming to pieces after a series of scandals that have also swept away the myth of the former "trade unionist" president Lula, who will not be able to stand again in the elections, given the convictions. And if the PT has to be reorganized, there will inevitably be a clash between Jair Bolsonaro's far right and the ubiquitous candidate Marina Silva, a long-time politician who presents himself with a new party, REDE Rete per la Sostenibilità, which for many analysts recall the Italian experience of the Five Star Movement.
The centrists called upon by President Temer with his Brazilian Democratic Movement (PMDB) hope to attract with former allies of the PSDB, the Democratic Socialist Party, and the never forgotten former President Cardoso, (who led the country for 8 years before of the PT's return with Lula), the disappointed by Lula's absence. Once again an uncertain electoral outcome full of surprises for a country whose currency has returned to new historic lows.
Migration flows are the new great global emergency, perhaps even more so than climate change, which this year has shown clear signs that nonetheless require very important positions to be taken. Thus Trump seems to remain the only victor on a compromised global framework due to the continuation of encouraging growth levels for the Stock Exchanges. A Pyrrhic victory, one might say.
