ECLAC raises growth forecast for Latin America to 5.2% in 2021

RIO DE JANEIRO, BRAZIL – The Economic Commission for Latin America and the Caribbean (ECLAC) on Thursday (8) raised its 2021 growth forecast for the region from 3.7% estimated last December to 5.2%, a figure that will still be insufficient to regain the 2019 gross domestic product (GDP) level.

“This expansion will not be enough to ensure sustained growth, as the social impacts of the crisis and the region’s structural problems have worsened and will be prolonged during the recovery stage,” warned the United Nations agency.

For 2022, ECLAC projects a regional growth rate of 2.9%, “which implies a deceleration”. It indicated in the document entitled “The paradox of recovery in Latin America and the Caribbean. Growth with persistent structural problems: inequality, poverty, low investment, and low productivity”.

The countries that are predicted to grow the most this year are Panama (12%), Peru (9.5%), Chile (8%), Dominican Republic (7.1%), Argentina (6.3%), Mexico (5.8%), Colombia (5.4%) and Bolivia (5.1%).

In the middle are El Salvador (5%), Honduras (5%), Guatemala (4.6%), Brazil (4.5%), Uruguay (4.1 %), the Caribbean islands (4.1%), Paraguay (3.8%), Costa Rica (3.2%) and Ecuador (3%).

Those that will have a worse performance this year are Cuba (2.2 %), Nicaragua (2%), Haiti (0.1%), and Venezuela (-4%).

“The current growth rate is not sustainable, and there is a risk of a return to mediocre trajectories, with insufficient investment and employment, and greater environmental deterioration,” warned the organization.

ECLAC, therefore, urged governments to maintain emergency transfer policies, which between January and April of this year reached US$10 billion (0.26% of 2020 GDP).

UNEVEN VACCINATION AND NEW VARIANTS

With 38.3 million infected and 1.29 million dead, Latin America is the world region most affected by the pandemic in health and economic terms; Brazil, Mexico, and Peru are among the five most afflicted countries in the world.

Regional GDP fell by 6.8% – the biggest recession in 120 years – and poverty and extreme poverty rose to 33.7% and 12.5%, respectively. In terms of per capita income, the region continues on a trajectory leading to a lost decade, according to the report.

Countries fear the arrival of a new wave of the contagious Delta variant (first detected in India) that could force the imposition of new quarantines.

“Unequal access to vaccines and health services and the appearance of new variants of the virus increases uncertainty about the evolution of the pandemic and the consequent opening and recovery of economies,” warned ECLAC.

In Latin America, the total population with a complete vaccination schedule is only 13.6%. At the same time, in the European Union, it is 34.9%; it is already 46.3% in the United States and Canada, for which reason the organization asks countries with a surplus to “share” vaccines.

In terms of foreign trade, the outlook is more favorable: ECLAC forecasts that regional exports will increase by 22% in 2021 -after experiencing a 10% decrease in 2020-, which is explained by the increase in the prices of raw materials and the recovery of demand in China, the United States, and the European Union, the region’s most important export destinations.