RIO DE JANEIRO, BRAZIL – The worst is far from over for Brazil, Argentina, Peru, and Colombia with the Covid-19 pandemic, the United Nations (UN) alerts. One of the consequences is that Brazil could accumulate close to 5% per capita income loss between 2020 and 2021 compared to pre-pandemic projections, said UN economist Ingo Pitterle.
In a report published today, the UN improves its global growth projection, slightly reduces the estimate for Brazil and alerts that, overall, economies are still at risk from the upsurge of Covid-19 cases.
The UN now projects a 5.4% global growth compared to the 4.7% estimated in January. This is a result of the 6.2% growth expected in the U.S. and 8.2% in China. Europe is expected to grow by only 4.1%, which will barely offset production losses in 2020.
Much of Brazil’s exports are bound for U.S. and Chinese markets. “Exports to both countries grew 30% in dollars compared to the same period last year,” notes the UN economist.
Domestically, concern lies with the growth of inflation, in the wake of the rise in commodity prices, and a hardening of monetary policy that “may undermine or delay recovery.”
For Pitterle, the issue for Brazil and the rest of Latin America is that the health crisis has exacerbated existing fragilities. The economy’s informal sector has increased, unemployment has also grown, and financial needs are greater for the coming years.
In other words, Latin America may emerge from the health crisis with the risk of very low growth for the coming years, insufficient for sustainable progress. “Growth of 2% for a country like Brazil is very low,” he says.
The pandemic continues to fuel uncertainty at the moment. According to the UN, the total number of new infections is higher in 99 countries than in December last year. For the vast majority of developing nations, production will remain below pre-pandemic 2019 levels. Lacking fiscal room to boost demand, several countries will face low growth or stagnation and the risk of a lost decade.
According to UN chief economist Elliot Harris, inequalities in access to vaccines across different countries and regions seriously threaten an already uneven and fragile economic recovery.
“Timely and universal access to Covid-19 vaccines will allow us to quickly emerge from the pandemic and steer the global economy toward a solid recovery rather than lose several more years of growth,” he says.
Source: Valor