Latin America and the Caribbean have suffered what the United Nations Economic Position and World Forecast Report (WESP) for 2021 has described as an “economic downturn in historical proportions” arising mainly from ‘ r the health crisis arising from the start of the coronavirus novel.
Pointing unknowingly to the onslaught of the biggest global health crisis in generations, the report says economic activity in the region has been flattened by “prolonged national locks, weaker commodity exports and a fall in tourism,” circumstances say that they had undermined economic activities and had been the result of “several years of disappointing growth.”
In the ensuing economic chaos, says the WESP report, real GDP in the region is estimated to have dropped by 8% last year.
The impact of COVID-19 on jobs, according to the Report, had pushed an estimated 45 million people in the region into poverty “eliminating all the progress made over the last 15 years,” while being responsible for “further obstacles” to achieve the Sustainable Development Goals. “
Arguing that last year’s COVID-19 economic attack on countries in the region left many of them facing “political risks and the possibility of a debt crisis,” the report says the current situation has come at a time when many countries in the region was already engaged in a battle against severe economic difficulties. “Still growth, weak investment and limited macroeconomic policy space made the region very vulnerable to global shock. National locks and movement restrictions have led to huge unemployment and income losses, exacerbating long-standing disparities, ”the Report adds. If the overall picture painted by the WESP report was clearly dark, the region managed to save some credit for what it says were the “significant stimulus packages that some countries said in response to the pandemic, apparently.
“This support, along with financial easing, gradual easing of restrictions and the recovery of global economic activity, has driven a modest recovery starting in the second half of 2020,” the report informs.
Going forward, the Report states that regional growth for this year is projected to be 3.8% before being moderated to 2.6% in 2022. “The recovery is likely to remain fragile and uneven,” the report added, adding there will be a resurgence of the COVID-19- associated infection rates could lead to new tightening of restriction measures.
At the same time, many countries in the region face significant political risks and the possibility of a debt crisis.
International Labor Organization Economic Commission for Latin America (ECLAC) estimates indicate that working hours have fallen by about 21 percent in the first nine months. “Job losses have been particularly acute in the informal sector, where the majority of occupations are contact intensive; and women, young people and low-educated workers, who make up the majority of employment in sectors such as retail and hospitality, are disproportionately affected. Countries where informal work is widespread and governments have implemented stringent and prolonged locks have experienced the biggest employment shock, ”the report adds.