The Economic Commission for Latin America and the Caribbean (ECLAC) raised the GDP growth forecast for Latin America in 2021 from 4.1% to 5.2%, after contracting 6.8% in 2020 due to the pandemic. The economic recovery, however, will not present the same pace in all countries in the region. According to the ECLAC’s report, only six Latin American countries will be able to reach the pre-pandemic level in 2021, the others only in 2023.
Among the countries expected to return to pre-pandemic economic levels, Chile is expected to grow 8% against a GDP contraction of -5.8% last year. Brazil should advance 4.5% after retreating -4.1% in 2020. And Paraguay, the country that had the smallest GDP drop last year, of -0.6%, should grow 3.8% this year.
Other Latin American countries have forecast growth even higher than Brazil and Chile, but not enough to recoup last year’s losses.
This is the case of Peru, which has an estimated growth of 9.5% for this year’s GDP, after a contraction of -11% in 2020. Argentina and Mexico may also advance more than Brazil, 6.3% and 5 .8%, respectively, but will still not be able to return to pre-pandemic economic levels after losses of -9.9% and -8.3% last year.
According to ECLAC, the divergences in the pace of economic recovery are related, in part, to the success of vaccination programs and the measures adopted by each government to control the pandemic and its impact.
Although the report only deals with forecasts – which may not be confirmed depending on the pandemic pace -, ECLAC warns about the risk of intensifying inequality between the richest countries, which are closer to returning to economic levels prior to the pandemic, and the poorest countries, where vaccination is progressing slowly.
For 2022, ECLAC projects average growth of 2.9% for Latin America and the Caribbean, well below the growth expected for 2021, suggesting a return to the low-growth dynamics prior to 2020. According to the document, the current growth rate is not sustainable and there is a risk of returning to a scenario of low investment and employment.
“Nothing allows us to anticipate that the low-growth dynamics prior to 2020 could change. The structural problems that limited growth in the region before the pandemic have worsened. In terms of per capita income, the region continues on a trajectory that leads to a lost decade”, warns the report.