ECLAC Executive Secretary Alicia Bárcena

The Latin America and the Caribbean region experienced a contraction of minus 7.7 per cent in 2020 but will have a positive growth rate of 3.7 per cent in 2021, due mainly to a statistical rebound that will nonetheless be insufficient to recover the economic activity levels seen in 2019, prior to the coronavirus pandemic .

According to the Economic Commission for Latin America and the Caribbean (ECLAC) in its preliminary overview of the regional economies 2020, it noted in a context of global contraction, Latin America and the Caribbean is the region in the developing world that has been hardest hit by the crisis stemming from COVID-19.

In the decade prior to the pandemic, the region was on a low-growth trajectory, and in 2020 it faced an unprecedented combination of negative supply and demand shocks, which is translating into the worst economic crisis in the last 120 years, ECLAC said.

It said though the significant fiscal and monetary efforts made by countries have served to mitigate the effects of the crisis, the pandemic’s economic and social consequences have been exacerbated by the structural problems that the region has suffered historically.

In 2021, ECLAC said it foresees a positive GDP growth rate that will fundamentally reflect a statistical rebound, but the process of recovering pre-crisis levels of Gross Domestic Product (GDP) will be slow and will not conclude until 2024.

According to the projections released by organisations of the United Nations, South America is seen contracting by -7.3 per cent in 2020 and growing by 3.7 per cent in 2021; growth in Central America is expected to shrink by -6.5 per cent in the current period and expand by 3.8 per cent next year; while the Caribbean is seen contracting by -7.9 per cent in 2020 and growing by 4.2 per cent in 2021.

“The growth dynamic in 2021 is subject to high uncertainty related to the risk of renewed outbreaks of the pandemic, the agility with which vaccines are produced and distributed, and the capacity to maintain fiscal and monetary stimulus to support aggregate demand and productive sectors. Making progress on sustainable and inclusive growth necessitates a productive transformation towards environmentally sustainable sectors, which would favour job creation and technological innovation,” executive secretary, Alicia Bárcena said.

ECLAC also noted that the region’s weaknesses and structural gaps, its narrow fiscal space, inequality, limited coverage and access to social protection, elevated labour informality, productive heterogeneity and low productivity are central to understanding the extent of the pandemic’s effects on the region’s economies, their difficulties for implementing policies that would mitigate those effects, and the challenges they face in undertaking a sustainable and inclusive economic reactivation.