Economy

Latin America's economy should grow 5.2% in 2021, according to ECLAC

The growth is expected although uncertainty remained about countries' uneven progress in dealing with structural problems and COVID-19 vaccination plans

Latin America's economy seen growing 5.2% in 2021
Photo: REUTERS/Sebastian Castaneda

The economy of Latin America and the Caribbean should grow 5.2% in 2021, although uncertainty remained about countries’ uneven progress in dealing with structural problems and COVID-19 vaccination plans, the United Nations’ ECLAC said on Thursday.

After the 6.8% contraction in 2020, the Economic Commission for Latin America and the Caribbean upgraded its view for this year versus the 3.7% rise it projected in December.

READ ALSO: Latin America and the Caribbean is the most indebted developing region due to the pandemic, says ECLAC

“The dynamics and persistence of growth in 2021 and going forward are subject to uncertainties arising from uneven progress in vaccinations and the capacity that countries have to reverse structural problems,” ECLAC said in a report.

This year’s forecasts reflect the low base of the comparison set in 2020, when economic activity was beset by the pandemic.

“The structural problems that limited the growth of the region before the pandemic were exacerbated and will negatively impact the recovery of economic activity and labor markets beyond the 2021 growth rebound and 2022,” the agency said.

READ ALSO: Private vaccination, by companies, begins in Colombia

It highlighted the explosive growth in electronic commerce. But it said digitization was aimed at the use of mature technologies, such as broadband, rather than the internet and artificial intelligence.

Panama, Peru and Chile should score the best performances in the year, with expansions of 12%, 9.5% and 8%, respectively, it said. Brazil, the top economy in the region, should grow by 4.5%, while Mexico was set to advance 5.8% and Argentina, 6.3%.

READ ALSO: Mexico inflation almost unchanged in June, while Brazil annual inflation rises to 5-year high

While the upward trajectory of commodity prices should benefit Latin America this year, ECLAC said its duration going forward was uncertain.

Despite the increase in employment in the first quarter of 2021, the region had so far only recovered 58% of the total jobs that have been lost during the pandemic.

Get the best insights about Latin America market in your inbox