Latin America worst collapse since 1821

AFP, – The Inter-American Development Bank (IDB) predicted Saturday a difficult recovery of the economy in Latin America and the Caribbean due to the debacle caused by the pandemic, which will exacerbate poverty in the continent.

“The region will emerge from the crisis with greater indebtedness, more poverty and an increase in income inequality,” the multilateral organization, said in a report.

According to the report, Latin America will grow 4.1% in 2021 after falling 7.4% last year, when there was the worst annual collapse on record since 1821. And it is “expected that this expansion will continue. slow down to 2.5 percent per year in 2022 and beyond, “

But the “shock” generated by mass unemployment will cause an increase in extreme poverty, which will jump from 12.1% to 14.6%, warns the IDB, and countries dependent on tourism and the export of raw materials will be particularly exposed to danger.

In addition, that forecast will depend “on the capacity to vaccinate” of the countries and on the fact that no new restrictions are imposed that “would have an additional impact on economic activity.”

Otherwise, a negative scenario – based on lower economic growth in the United States and Europe, new virus outbreaks and a slow rollout of immunization – “would slow growth to only 0.8% in 2021”, – 1.1% in 2022 and 1.8% in 2023, the agency said.

Since before the arrival of covid-19, “the region had already been losing ground in terms of its share in global GDP and the pandemic has only reinforced that trend,”

The continent has been one of the hardest hit by the pandemic. With only 8% of the world’s population, Latin America and the Caribbean register around 25% of all deaths from coronavirus (733,000).

To avoid a catastrophic scenario, the IDB urges countries to undertake urgent fiscal reforms that improve spending efficiency, broaden the tax base, combat tax evasion, and reduce informality, among other measures.