Economic recovery in Latin America from the COVID-19 pandemic will be slower than previously believed. This is according to Alicia Bárcena, the Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC) while presenting the organization’s economic report on the region via Zoom.
“It will take longer than believed and will have impacts on growth, unemployment, inequality, poverty, and it (recovery to pre-pandemic activity) will be longer than expected. Resuming the economic activity (that was taking place) before the crisis will take several years, and it will be slower than the subprime crisis,” she said.
Bárcena said Latin America had entered into an economic recession in the first trimester with a contraction of 1.5% and a drop in the PIB of -9.1%.
“Cepal projects there will be a greater fall in South America of -9.4%; -8.4% in Central America and Mexico; and -7.9% in the Caribbean, excluding Guayana,” she said.
She said they are concerned Latin America will be facing a “lost decade” in terms of GDP per capita. The report also shows that international support will be required for Latin American nations to access financing with appropriate terms.
Some of the recommendations for maintaining an expansive fiscal policy include rising tax revenues, such as income taxes and imposing taxes on the digital economy, as well as eliminating tax evasion.
They are also recommending international cooperation for the reduction of external debts so these resources could be allocated to infrastructure and development investments.