North America

The North American region will be tested by growing social and political pressures in the next five years, especially if economic growth remains lackluster and fails to generate broader prosperity. With economies ranging from the United States to Dominica, conditions and dynamics vary dramatically, but governments across the region are finding it harder to manage rising public demands for greater economic and social stability at a time when budget constraints and debts are limiting options. Public frustration is high throughout much of the region, because uncertainty about economic conditions and social changes is rising at the same time that trust in most governments is declining.

The health of the US economy will remain the prime variable for the region, given its large size and close links. The US recovery from the 2008 financial crisis has been slower and harder than after previous downturns, and most forecasts expect US economic growth to be modest—probably not strong enough to boost growth across the region—for the next several years. Economists are divided, however, over how long the current recovery might continue. Some, focusing on the current recovery’s seven-year span, warn the US economy already is “overdue” for another recession based on historical averages, while others observe that periods of expansion have been longer—up to 10 years—in recent decades. Whenever the next US recession hits, it will reverberate through the region by reducing US demand for goods and the massive southward flow of remittances.

  • Even in an increasingly diversified country like Mexico, remittances from the United States, still account for around 2 percent of GDP, and they comprise as much as 20 percent of the economy in Haiti. Central America would be particularly vulnerable, with already struggling economies in Guatemala, El Salvador, Honduras, and Nicaragua deriving 10 to 20 percent of their GDP from remittances.
  • A US economic downturn would also further close a traditional safety valve for desperate people who seek work in the United States as well as reduce the flow of remittances from the United States. The state of the US economy historically also has had a significant impact on Canadian growth patterns because of the large volume of bilateral trade.

Mexico’s economic and social reforms also will probably have muted political impact within the country and region. President Pena Nieto has enacted wide-ranging reforms in key industries—such as oil, communications, and finance—as well as education in an effort to enhance Mexico’s competitiveness, but growth has not increased significantly so far, and public support has soured amid corruption allegations, persistent violence, a weakening peso, and domestic crises such as the disappearance of 43 students at a demonstration in 2014. Major reforms, such as opening Mexico’s oil industry to foreign investment, take time to bear fruit, but antigovernment protests could escalate if the disappointments remain more apparent than the benefits in the next several years.

  • With presidential elections in 2018 and Pena Nieto limited to one term, voters may lean toward a more leftist opposition that pushes to roll back reforms and trade deals if reforms do not reduce Mexico’s stark economic divide.
  • Moreover, the success or failure of Mexico’s high-profile reforms might affect the willingness of other countries in the region to take similar political risks.

If more protectionist sentiment takes root in the next several years, particularly in the United States and Mexico, the future of trade in the region could be in play. US domestic politics has raised doubt about the future of the Trans Pacific Partnership (TPP) trade deal, and one of the leading potential Mexican presidential candidates on the left for 2018 has blamed the North American Free Trade Agreement (NAFTA) for Mexican job losses. At the same time, however, the CAFTA-DR trade agreement between the US, Central America, and the Dominican Republic has generated less political controversy because of its more modest scope.

  • Public opinion on trade varies widely across the region. Polls suggest popular concern about trade is significant in the United States—depending on how questions are phrased—while a small majority of Mexicans generally support NAFTA. A growing majority of Canadians have come to support NAFTA, although they appear less certain about the benefits of the TPP.
  • In this atmosphere, an economic downturn in the region could drive some political leaders to take a harder line on trade to reassure publics, even though—as generally agreed among economists—technology and automation have been more important factors in job losses and flat wages and are likely to remain so over the coming years.

The issue of Caribbean, Central American, and Mexican immigration—and even travel—is likely to loom larger in the region in the next five years, even though the flow of workers from Mexico to the United States has dropped since the 2008 financial crisis, apparently due to the economic downturn and tighter border enforcement in the United States and more job opportunities and demographic changes in Mexico. If terrorism flares in the United States and Canada, yet tighter border restrictions could further limit movement within the region, with political, economic and social consequences.

  • Strong expressions of anti-immigrant sentiment during the US election campaign have fueled public resentment in Mexico, which could feed into Mexico’s presidential election in 2018. Moreover, the tighter the US border gets, the more Mexico is likely to increase its own efforts to gain better control of its southern border to discourage Central Americans from coming and staying in Mexico if they fail to get farther north.
  • Meanwhile, the further spread of the Zika virus in the region over the next few years could discourage tourism, which some estimate provides around 5 percent of GDP in the Caribbean, around 7 percent of GDP in Mexico, and a large share of jobs in southern US states, such as Florida.

Concern about violence and social order will become increasingly salient for many countries in the region, though for different reasons. One prime driver of violence is the illicit drug trade. Violence is particularly rampant in northern Central America, as gangs and organized criminal groups have undermined basic governance.

  • Prospects for improvement appear dim as long as governments lack the capacity to fight narcoterrorism or to provide such public goods as education, health services, infrastructure, gender equality, and the rule of law.
  • El Salvador, Guatemala, and Honduras rank among the most violent countries in the world, as shown by their high murder rates for women, which have contributed to migrant flows northward, particularly of unaccompanied children in recent years.
  • Some parts of Mexico have seen significant advances in economic development and governance, but other regions continue to struggle with pervasive poverty, corruption, and impunity that feed high levels of violence and social tension.
  • In much of the region, activist civil society organizations can fuel social tension by increasing public awareness of elite corruption and mismanagement in their push for better governance. In August 2015, public revelations of high-level corruption in Guatemala sparked massive antigovernment protests, bringing down the President and Vice President, and civil society groups have helped mobilize major demonstrations in Honduras and Mexico, as well. Most of these protests have been peaceful but could turn violent as public frustration with political and economic elites grows, or if governments use heavyhanded suppression.

Geopolitical Relevance of Region in Next Five Years: Eyes on the United States. The arrival of a new US administration will draw intense scrutiny from across the region for any signs of change in the US global role. Given its extended engagement in Afghanistan and Iraq, highly polarized politics, and the domestic focus of the election campaign, outside observers wonder if Washington has the will and the means to continue exercising broader international leadership.

  • While the US stance on trade has gotten the most attention, US allies also will be seeking assurance that Washington will honor security guarantees in the face of more assertive Chinese and Russian actions, and adversaries will be gauging their room for maneuver. North American security could become a greater concern if economic and political stresses in key states such as Mexico or Cuba spark destabilizing protests that result in changes in government or surges in migration.

Other Considerations. How public pressures for economic and political change are channeled will be a crucial issue in North America in the next several years. Modern communications have made it easier for frustrated citizens in the region to gain support and put pressure on elites, mobilize nongovernmental efforts, or compare the performance of different local governments, but the response still may not keep up with the demand.

  • The capacity of social media and other forms of on-line advocacy to drive meaningful social and political change remains unclear, or at least varied across countries. For example, elites in Mexico and Central America have become increasingly aware of the risks of stark inequality and the publicity it can cause, but many observers doubt they are willing to forego their financial advantages to support reforms to improve competition, education, infrastructure, and social welfare benefits.
  • Meanwhile, NGOs across the region have become more active in pushing for better government services—sometimes taking the initiative to provide services—but it is often difficult to scale these efforts to the scope of the challenge. In addition, wide variations in local and state government efforts allow for experimentation that may generate momentum for more successful approaches—or highlight the risks of poor governance.

In this environment, voters may be driven by more-personalized politics if they feel traditional parties and governments are not addressing their needs. Increased use of information technology has enabled some racial minority groups to highlight structural inequalities and injustices. This sensitive topic probably will continue to lead to complementary or contrary movements.

  • Some citizens with the job skills and resources to work elsewhere may vote with their feet, expanding the brain drain from places like Mexico and Central America at a time when these countries most need strong human talent to strengthen their economies and political systems.
  • Ultimately, frustrated citizens may become more willing to take to the streets to vent their anger if they judge conditions are worsening—with no prospect for improvement. Voters can express their views through elections, the spate of high-profile demonstrations in various countries around the world in the past several years suggests elites should not bank on public resignation.
Infographic - United States' Population Projection of 365,266,000 in 2035

aEstimates for religious affiliation are based on data from the World Religion Database and are rounded to the nearest one-tenth of a percent.

bTotal Fertility Rate is the projected average number of children born to a woman if she lives to the end of her childbearing years.

Note: Demographic data is presented for countries estimated to have the largest population in each region in 2035.