IDB predicts tough economic recovery in Latin America after pandemic

The “shock” generated by massive unemployment will also cause an increase in extreme poverty, which will go from 12.1% to 14.6%A degradation to which countries dependent on tourism and the export of raw materials will be particularly exposed.

The agency also warned that the future of the region will depend on the reforms undertaken by governments to alleviate the emergency.

After the historic 7.4% drop in regional gross domestic product recorded last year, IDB predicts 4.1% economic growth for 2021, followed by 2.5% in subsequent years, depending on countries’ “immunization capacity” and provided that no new restrictions are imposed which “would have an additional impact on economic activity”.

Otherwise you see a negative scenario – based on weaker economic growth in the United States and Europe, the appearance of new viral epidemics and a slow roll-out of vaccination – which “would slow growth to only 0.8% in 2021”, -1.1 % in 2022 and 1.8% in 2023.

To avoid the catastrophic scenario, The IDB urged countries to undertake urgent tax reforms, as well as measures that boost productivity, regional value chains, the digital economy and inclusive job creation, without sacrificing the goal of slowing climate change which particularly threatens the region.

Since the onset of the health emergency, the IDB “has mobilized more than $ 24 billion” in funding for governments and businesses in the region, “including $ 1,000 million (…) to finance the purchase vaccines, “he said. Mauricio Claver-Carone, president of the organization, at a meeting of the governors of the bank in the city of Barranquilla this Saturday.

But to maintain a comparable level of support in the future, “current resources are simply not enough”. It is necessary “to consider a recapitalization” so that it can fulfill its role in the recovery of the region, he added.

Without specifying the amount required, Claver-Carone indicated that the external financing needs of the governments of the continent will reach 110,000 million dollars per year over the next decade.

For its part, International Monetary Fund He noted on Saturday that he saw emerging signs of a stronger global economic recovery, but warned that significant risks remained, including the emergence of coronavirus mutations.

The first Deputy Managing Director of the IMF, Geoffrey okamotosaid early April Fund to update January forecast for global growth of 5.5%, to reflect the additional spending of the fiscal stimulus in the United States, although he did not give details.