Latin America will expand this year by 5.2%, a figure that denotes a significant rebound from the deep contraction of 6.8% recorded in 2020, but that will not be enough to ensure sustained growth or reverse the effects of the pandemic, ECLAC warned on Thursday.
Panama (12%), Peru (9.5%) and Chile (8%) will lead the region’s growth, followed by the Dominican Republic (7.1%), Argentina (6.3%), Mexico (5.8%), Colombia (5.4%) and Bolivia (5.1%).
The worst performers this year are Cuba (2.2%), Nicaragua (2%), Haiti (0.1%) and Venezuela (-4%), while those in the middle are El Salvador (5%), Honduras (5%), Guatemala (4.6%), Brazil (4.5%) Uruguay (4.1%), the Caribbean (4.1%), Paraguay (3.8%), Costa Rica (3.2%) and Ecuador (3%).
“The impacts of the crisis and the structural problems of the region have become more acute and will have a negative impact on the recovery and on the labor markets beyond the rebound of 2021 and 2022,” the executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), Alicia Bárcena, told Efe.
By 2022, the regional growth rate will be 2.9%, according to the United Nations agency, which had estimated last April a gdp rebound for this year of 4.1%.
These growth rates, Bárcena added, “are not sustainable and there is a risk of a return to mediocre trajectories, with insufficient investment and employment, and greater environmental deterioration.”
The worst performers this year are Cuba (2.2%), Nicaragua (2%), Haiti (0.1%) and Venezuela (-4%), while those in the middle are El Salvador (5%), Honduras (5%), Guatemala (4.6%), Brazil (4.5%) Uruguay (4.1%), the Caribbean (4.1%), Paraguay (3.8%), Costa Rica (3.2%) and Ecuador (3%).
“Of the 33 countries in the region, 19 would not have recovered the GDP of 2019. That’s why we say there’s a paradox because they grow, but it’s not enough,” Bárcena said.
The most affected region
With a contraction of 6.8% in 2020 – the largest in 120 years – 38.3 million infected and 1.29 million dead, Latin America is the region of the world most affected by the pandemic in terms of health and economics.
Poverty and extreme poverty increased to 33.7% (209 million people) and 12.5% (78 million), respectively, while the closure of 2.7 million businesses brought the unemployment rate last year to 10.7%.
The level of regional GDP per capita ended 2020 at the same level as in 2010, which means that the region is facing a new lost decade, such as the one experienced in 1980.
The region, which grew by only 0.1% in 2019, spent an average of 1.55% of its GDP on direct aid in 2020 to combat the economic crisis caused by COVID-19 to alleviate the effects of the crisis.
Bárcena, however, expressed concern about the “insufficient” emergency transfers made between January and April of this year, which only reached 10,000 million dollars (0.26% of GDP in 2020).
If this were to continue, coverage would decrease from 49% to 29% of the population, that is, from 326 to 231 million people between 2020 and 2021, he warned after the presentation of the report “The paradox of recovery in Latin America and the Caribbean”.
Emergency transfers to the most vulnerable sectors eased the rise in poverty in the region in 2020, although the difference in income distribution (2.9% of the Gini index) did increase in the world’s most unequal region.
Latin America is also the area with the greatest weight of external debt in GDP (56.3%), which “reduces fiscal space and endangers recovery and future growth,” according to the agency.
Foreign trade is undoubtedly the most favorable outlook: ECLAC expects regional exports to increase 22% in 2021 – after experiencing a 10% decline in 2020 – due to the increase in raw material prices and the recovery in demand in China, the United States and Europe.
The health crisis is far from over in Latin America, where the contagious delta variant is spreading, several countries are facing a new wave of infections and the pace of vaccination is advancing in dribs and drabs, with the exception of Chile, one of the world leaders in inoculation.
“We are facing great uncertainty and we must try to change the production model to support growth and investment,” the executive secretary concluded.
