The Economic Commission for Latin America and the Caribbean (Cepal) estimated that the economy will fall 9% this year due to the effects of the COVID-19 pandemic.
Its previous estimate was released in April when the forecast was a 6.5% drop in Mexico’s Gross Domestic Product (GDP).
Read: GDP drop of up to 8.8% and 1.4 million layoffs: scenarios that Banxico sees for COVID
Cepal executive secretary Alicia Bárcena stressed that Mexico and Brazil will be the two great economies with the strongest falls.
For the Latin American and Caribbean region, a contraction of 9.1% is expected; their previous forecast anticipated a 5.3% drop.
According to Cepal, by 2020 poverty in Mexico will increase and people in this situation will rise from 41.9 million to 49.5 million.
While the situation of people in extreme poverty would rise from 11.1 million to 17.4 million.
Mexico, Argentina, Brazil and Peru will be one of the countries where poverty will grow the most in Latin America, a region where poverty will grow from 186 million to 231 million people, i.e. the rate will increase to 37.3%.
While extreme poverty will increase from 68 million to 96 million people, equivalent to 15.5% of the total population.
Tackling the growing effects of COVID-19 for an equal revival: new projections https://t.co/YkXclQYpyD
— ECLAC (@cepal_onu) July 15, 2020
In total in the region, unemployment will affect 44 million people reaching an unemployment rate of 13.5%
During the conference to present the study “Facing the growing effects of COVID-19 to achieve an equal revival: new projections”, he proposed to the Latin American and Caribbean region “avoid the austerity of the public sector”
Bárcena reiterated that measures such as basic emergency income, food transfers, co-financing of wages, support for small businesses and conditional rescue of large enterprises need to be implemented.
He also stressed the need to expand expansionary fiscal and monetary policies because “this crisis is not going to last long (…) it’s a very strong and severe pandemic.”
He also spoke of the need for support from governments, which could guarantee a food bond for low-income families and a universal basic emergency income.
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