OBELA Analysis

One year after the global closure due to COVID-19, exchange rates responded to financial markets more than to macroeconomic conditions. This is due to the depth that financialization has reached in the economy and the influence that the Fed's policies have on international markets.

Unlike the textbooks, where exchange rates are a reflection of economic growth, inflation and international reserves, the relationship of the exchange rate with these national variables is increasingly questionable.

Central bank intervention in exchange rates has been minimal. When the exchange rate responds more to financial variables than to real ones, the depth and degree of development of each country's financial sector is more important.

Central America was the region most affected by the supply and demand crisis in the Americas. However, there was a great disparity in the declines of each country. There are two groups, the first lost less than seven years of production, and the second more than ten.
The lost production years are calculated by comparing real GDP in the second quarter of 2020, when social distancing measures were implemented in the Americas, with the quarterly GDP closest to its value.
In the least affected countries, it was migrant labor and the anchoring with the U.S. economy, via the maquila, that allowed them to lose few years of production and to recover more than half of the lost years.

On 23 June 2016, the people of the United Kingdom (UK) decided to leave the European Union (EU) in a referendum by a margin of less than 2%. After more than four years of negotiations, the Brexit transition period ended on 1 January 2021. The UK's exit from the European Union implies changes in the structure of the world economy.

During the Brexit negotiations, in parallel it signed 59 trade agreements with non-European countries, including the UK-Japan agreement. In Latin America, it also reaffirmed the partners it had via the EU. A key element in the Brexit free trade agreement is that it did not incorporate financial services.

The project of British reindustrialisation and economic independence from Europe, via Brexit, has encountered significant limits in the very high financialisation of its economy, its deep trade dependence and its lack of productive competitiveness.