translated from Spanish: Covid to increase poverty in Latin America by 37.3%: ECLAC

The Covid pandemic crisis has produced “the worst economic and social downturn of recent decades.” According to a report by the Economic Commission for Latin America and the Caribbean (ECLAC), a 9.1% growth rate – the worst figure in 120 years – is expected in the region this year, accompanied by an increase in poverty, which will reach 37.3%.
The 2020 Economic Study of Latin America and the Caribbean predicts that the unemployment rate will reach 13.5% and that there will be a “significant increase in inequality”.
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Economic growth was negative in the first half of 2020 in 9 of Latin America’s 20 economies, and slowed by eight.
The contracting economies are Argentina (-5.2%), Brazil (-0.3%), Cuba (-3.7%). Ecuador (-2.4%), Haiti (-3.1%), Honduras (-1.2%), Mexico (-1.4%), Peru (-3.4%) Venezuela (-29.8%).
ECLAC explains the contraction of regional GDP “due to the significant drop in domestic demand in each of its components as by declining external demand. In addition, since mid-March, the pandemic confinement health measures have led to the partial or total detention of the production of goods and services from different sectors of countries’ economic activity.”
Faced with the landscape of low growth rates, the Commission indicates that recovery dynamics will be slow and the economic and social costs of the crisis could continue to rise throughout 2020 and 2021.
In fact, the region’s GDP per capita level is expected to be equivalent to 2010 by 2020, and poverty by 2006, “which would mean a decade lost in economic terms, and nearly a decade and a half in social terms.”
According to the study, “this is undoubtedly the strongest economic and social crisis the region has experienced in several decades, and has highlighted the structural weaknesses of economies.”
The document notes that the Covid pandemic “has led the world economy to the worst recession since World War II, with the highest percentage of countries experiencing a recession simultaneously (90%) since we have estimated.”
Globally, GDP is projected to fall by 5.2, 7% for developed economies and 1.6% for emerging economies.
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The uncertain economic recovery
The crisis that triggered the pandemic erupted into the world economy in a context of widespread debt accumulation. According to ECLAC, prior to the global health crisis, debt had reached an all-time high of 320% of global GDP, and was exceeded in the first quarter of 2020, when it reached 331%.
Because the spread of the pandemic across countries and regions has been heterogeneous, the onset of recovery will be mixed, impacting the global economy.
“In any case, the lifting of social measures to contain the pandemic and physical estating will have a positive effect on economic growth, as the production and redistribution of goods and services that have been interrupted by the crisis can be resumed,” the agency anticipates.
Although, he warns, “this does not guarantee that economies will regain existing GDP and GDP per capita levels before the pandemic erupts.”
For ECLAC, fiscal measures packages to contain the pandemic are key in mitigating the economic and social effects of the crisis.
“In tackling and overcoming the pandemic and the consequent humanitarian, social and economic crisis, an expansive fiscal policy has been required, which must be maintained over time to make economic revival and the reconstruction of more inclusive, egalitarian and resilient societies feasibility,” he concludes.
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Original source in Spanish

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