Upcoming elections and the ideological pendulum
If you thought there was a pink tide 2.0, then you should be prepared for it to recede.
In last Tuesday’s newsletter, I provided some predictions for the next 100 days. Then I started working on a presentation about the next 18 months. The goal is to block out the noise of the day and focus on the bigger trends. The presentation is still in draft form, but here is one of the first slides.
There are a lot of general elections in the next few months and all but one hit nominally left and center-left presidents1. If even half these elections go against the incumbent party, it means the pendulum starts to shift back toward more conservative policies.
Some additional points:
My base case assumes Trump’s trade war drags the US into recession, depressing Latin America’s economies and increasing crime and protest risks (those are other slides in the presentation). Those factors definitely play against incumbent parties entering elections in late 2025 and early 2026.
However, the third point from last Thursday’s newsletter (no paywall!) commented that Latin America and the world may be moving past the previous anti-incumbent environment2. Given the current trends, we should expect at least one ruling party, and perhaps more, to defy the current odds and pull off an unexpected victory. Will it be Chile? Colombia? Peru3? Bolivia? Brazil? Some country is going to surprise us.
If many countries in the region tilt away from the left, remember that it’s a pendulum and it will shift back a few years later.
All my usual cautions about left-right labels apply here.
Instability caused by weak economies goes beyond elections. Governments that don’t have elections in the next 18 months don’t have a pressure valve for citizen anger.
I’m also working through other scenarios. If my base case is a mild US recession, then I also want to work through scenarios on either side of that case. What happens if the recession (both in the US and in parts of LatAm) is deep or prolonged? And what happens if I’m wrong and it’s a booming US economy in late 2025 and into 2026? More thoughts on scenarios in the coming weeks.
This is about what presidents call themselves. Peru’s president is still from a leftist party, even if she doesn’t govern like one.
Though it’s outside of LatAm, add Australia to the datapoints about the shift away from the anti-incumbent environment.
LOL, no, it won’t be Peru.