ECLAC's headquarters in Santiago, Chile. Photo: ECLAC

UN says Latin America needs greater integration to fight COVID-19

A new report by the organization's commission for the region says poverty could increase by 19% and extreme poverty by 33% in countries

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  • Regional integration is crucial mainly in the production and provision of essential goods;
  • Recommended measures were divided into three fronts: sanitary, social and economic.

The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) is prescribing greater integration among the region’s countries in order to mitigate the effects of the COVID-19 pandemic. According to a new report released during the weekend, the commission says that there’s no other strategic option for Latin American governments.

And the impacts predicted by ECLAC are severe. Unemployment in the region could increase by 10 percentage points. This could lead to the number of poor in the region rising from 185 million to 220 million people, out of 620 million inhabitants in total; and the quantity of people living in extreme poverty could increase from 67.4 million to 90 million.

Alicia Bárcena, the commission’s executive secretary, stressed in a statement the importance of protecting the most vulnerable groups from the crisis. “The degree of inequality is also important in assessing the extent to which the crisis will impact on the most vulnerable groups of society. The more unequal a country is, the more vulnerable groups will bear the burden of the economic impact of the pandemic and the fewer resources they will have to fight the pandemic.”

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The report stresses the urgency of implementing immediate measures in the region that allow for flattening the curve of contagion by the coronavirus, “without flattening the curve of the economy.” 

One of the direct effects involves the impact on health systems in the region, which have infrastructure that is insufficient for managing the problems generated by the pandemic (see graphic below). The majority of the region’s countries are characterized by having weak health systems that do not guarantee the universal access needed to confront COVID-19. 

Source: Latin America and the Caribbean and the COVID-19 pandemic: economic and social effects/ECLAC

New development model

ECLAC’s study indicates that the region needs a new development model to be able to restore conditions for recovery and development further along. Regional integration is crucial for this, mainly in the production and provision of essential goods. 

The study also indicates that Latin America confronts the pandemic from a weaker position than the rest of the world. This crisis have prompted ECLAC to forecast a decline of at least -1.8% in the region’s GDP, “although a contraction of between -3% and -4%, or even more, cannot be ruled out“. The final economic impact will depend on the measures taken at a national, regional and global level, the Commission warns.

According to the report, the virus has accelerated the use of the internet and digital technologies, but this could also have a negative consequence, as uneven access to them could exacerbate inequalities.

Source: Latin America and the Caribbean and the COVID-19 pandemic: economic and social effects/ECLAC

The world finds itself facing a humanitarian and health crisis without precedent in the last century, in an economic context that was already adverse. In contrast to 2008, this is not a financial crisis but rather one affecting people, production and well-being.

Alicia Bárcena, executive secretary of ECLAC.

Health, social and economic emergencies

According to ECLAC, to address the sanitary emergency, it is imperative that the containment measures suggested by the World Health Organization (WHO) be applied efficiently, that health systems be strengthened, and that universal access to tests and medication be ensured.

Alicia Bárcena, executive secretary of United Nations Economic Commission for Latin America and the Caribbean (ECLAC). Photo: The Dialogue

In the social realm, official measures such as unemployment subsidies and a basic emergency income are needed, as well as measures to support Small Businesses (SMBs) and self-employed workers.

To counter the economic emergency, the study explains that actions involving fiscal policy, monetary policy and international cooperation are needed. On fiscal matters, fiscal stimulus packages must be implemented with the aim of protecting income and minimizing the economic contraction.