Economy

Latin American economy to grow again in 2021, says ECLAC

The region's economy will grow 3.7% in 2021, after a 7.7% contraction this year, informed ECLAC

Brazil's Rio de Janeiro downtown
Photo: Reuters/Ricardo Moraes
  • The Latin American economy will grow 3.7% in 2021, after a 7.7% contraction this year, informed ECLAC;
  • Both global and regional recovery will be linked to the availability of a vaccine against the virus, the document added.

Latin America‘s economy will grow again in 2021, after a deep recession caused by the coronavirus pandemic this year, the UN economic commission for the region said on Wednesday.

The Latin American economy will grow 3.7% in 2021, after a 7.7% contraction this year, informed the Economic Commission for Latin America and the Caribbean (ECLAC). An earlier July report projected a deeper retraction in 2020 of 9.1%.

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“It is the biggest contraction since records began in 1900. GDP is falling in virtually every country,” said the report, forecasting that it will take years to resume economic activity levels from before the crisis.

Regional exports – dependent on raw material shipments – will shrink 13% this year, with import volumes falling 14%, the highest since the global financial crisis of 2008-2009, the report showed.

Even before the pandemic, Latin America had already registered an average growth of 0.3% in the six years until 2019. The report said that the recovery of next year would only help to mitigate the impact of the record contraction.

Unemployment is expected to rise to around 10.7%, the document said, with many people leaving the workforce and poverty rising dramatically.

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“The scars left by the biggest crisis in decades, with the increase in unemployment and poverty levels, in addition to inequality, can intensify latent social tensions with consequences for the resumption of economic activity in the countries,” warned the report.

Both global and regional recovery will be linked to the availability of a vaccine against the virus, the document added.

The worsening of global financial conditions and any premature withdrawal of monetary and fiscal stimuli, both in the large developed economies and at the local level, also pose risks to the Latin American economy, said ECLAC.

Translated by LABS

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