Lower global growth will mean lower external demand and lower growth in world trade, which will have a direct impact on Latin American economies. Photo: Unctad.
Latin America and the Caribbean will slow to 2.1% in its economic growth rate in 2022, after growing an average of 6.2% in 2021.According to new forecasts released by the Economic Commission for Latin America and the Caribbean on Wednesday, which highlight asymmetries between developed and developing countries, and challenges in meeting the costs of the COVID-19 pandemic.
In the annual report “Primary Equilibrium for the Economies of Latin America and the Caribbean 2021”, released at a virtual press conference from Mexico City, the Economic Commission for Latin America and the Caribbean warns that the slowdown occurs in the context of significant inequality between developed and emerging countries and in development in the The ability to implement fiscal, social, monetary, health and immunization policies for sustainable recovery from the crisis caused by the current pandemic.
High inflation, debt management, structural problems of low investment and productivity, poverty and inequality are the main challenges to growth and job creation in the region, says ECLAC.
In the report, ECLAC requests the facilitation of international financing and calls for greater regional integration and continued vaccination against COVID-19.
“We are facing a period of tremendous uncertainty in which disparities are deepening and We will experience lower growth, both in GDP and in trade. We will have a less favorable context for the region with less fiscal space and inflationary pressuressaid the Executive Secretary of the United Nations, Alicia Barcena.
According to the report, the region faces a very complex year 2022: the persistence and uncertainty of the development of the epidemic, a sharp slowdown in growth, a decrease in investment and productivity, a slow recovery of employment, the persistence of the social effects of the crisis, a decrease in the fiscal space, an increase in inflationary pressures and fiscal imbalances.
The region’s economic engines will perform poorly this year. The Economic Commission for Latin America and the Caribbean estimates that Brazil, the largest economy, will grow only 0.5% lower. Mexico will score +2.9%; Colombia + 3.7%, Chile + 1.9%.
Average projected growth of 2.1% shows differences between countries and sub-regions: The Caribbean will grow by 6.1% (excluding Guyana), Central America will grow by 4.5%, and South America will grow by 1.4%. In 2021, the region showed higher-than-expected growth, with an average of 6.2%, thanks to the lower comparison base formed by 2020, increased mobility and a favorable external context.
Barcena noted that part of the cloudy horizon is due to the fact that Labor markets have not recovered from the blow of the health emergency.
“The epidemic had a very strong impact that was UnofficialWhich is expected to increase with devastating social impacts”, noting that this is clearly manifested in the vulnerability of some sectors of the population, such as women.
Despite the setbacks, ECLAC expects a slight improvement in poverty and extreme poverty levels, with a decrease of 1.5% in poverty and 0.7% in extreme poverty.
The study attributes the complex reality of the region in 2022 to persistence of the pandemic and uncertainty about its development; Sharp slowdown in global growth. Continued low investment and productivity and slow employment recovery; The continuing social effects of the crisis. smallest financial space; Increasing inflationary pressures and fiscal imbalances.
Lower global growth will mean lower external demand and lower growth in world trade, which will have a direct impact on Latin American economies.
regarding As for the prices of raw materials on which a large part of the regional GDP depends on its exports, expectations indicate a decline or, at best, to remain at the level of 2021, without rising.
For this reason, the Economic Commission for Latin America and the Caribbean notes that the recovery of the countries of the region will depend, above all, on domestic demand, which in 2021 saw a recovery with higher consumption driven by monetary support implemented by governments to overcome the health emergency and transfers that have grown by 30%.
“We are proposing to maintain transport measures and other forms of support while creating jobs,” Barcena said.
He stressed that in order to control inflation and not stop growth, monetary authorities must make use of all the tools they have, beyond the interest rate. He also called for increasing levels of collection and improving the tax structure.
“The expected slowdown in the region in 2022, along with structural problems of low investment and productivity, poverty and inequality, require that boosting growth be a key element of policies, while addressing inflationary pressures and macro-financial risks,” said Alicia Barcena. .
about covid vaccination, Parsina urged the continuation of immunization campaigns as the mainstays of economic recovery, appealing to the rich countries, which had a monopoly on most of the vaccines produced, to share them with the emerging and developing countries, where they could not access them.
The Economic Commission for Latin America and the Caribbean noted that vaccination not only affects the control of the epidemic, but also reduces the chances of further mutations of the coronavirus, and warned that if vaccination coverage is not increased in all countries, the global recovery will not be sustainable.
It is clear that in addition to national policies, international support is needed, Barcena confirmed.
We call on the international community to facilitate and enhance access to finance in the region. Financing under more favorable conditions, hopefully on concessional terms. It is one of the issues that ECLAC insists on: greater redistribution of liquidity and, incidentally, greater redistribution of the concentration of wealth and income at the global level”, He said.
He considered that one way to achieve this would be to impose a global tax of between 15% and 25% on large multinational corporations.
“There are many things to be done, and many of them go through national efforts by states, by authorities, but also by Better multilateral status, better cooperation process, greater unity in the region, greater integration, which is one of the shortcomings that we face in Latin America and the Caribbean.
“Regional integration can be a huge driving factor, we’ve seen it in vaccination, we’re seeing it in CELAC (Community of Latin American and Caribbean Nations) operations, but we have to achieve that also at the subregional level,” he said. Cepal Executive Secretary.
According to Barcena, The region has an outstanding task, “which is greater regional integration and resilience, because there will be disruptions in supply chains. Geographical proximity should help us increase resilience in Latin America and the Caribbean.”
(With information from the United Nations and the Economic Commission for Latin America and the Caribbean)
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