The economic recovery in Latin America and the Caribbean will not be enough to alleviate the recession caused by the covid-19 pandemic in 2020, according to the World Bank. Regional GDP will grow by 5.2%, below the 6.5% contraction experienced last year. In its latest report, the regional body improves its projections by 1.4 percentage points compared to January thanks to the arrival of vaccines, the reduction of restrictions on mobility and the boost derived from the reactivation of advanced economies. However, the agency warns that Latin America continues to be exposed to risks for the recovery, such as possible problems with the immunization campaign, a new outbreak of the pandemic, social outbreaks or some climatic disaster.
For the three main regional economies, Brazil, Mexico and Argentina, the World Bank forecasts growth of 4.5%, 5% and 6.4%, respectively. In the case of Brazil, it would mean recovering what was lost in 2020 (-4.1%), but not so for Mexico and Argentina, which were heavily hit in 2020, with setbacks of 8.3% and 9.9%. In Argentina, the record fall due to the pandemic deepened the crisis that had been dragging on for two years, which brought GDP to a level similar to that of 2009. The agency forecasts that the Colombian economy will expand by 5.9%, that of Chile 6.1% and Peru 10.3%.
In its report, the agency also raises its world growth forecast to 5.6% by 2021, which represents the largest recovery from a recession in 80 years, thanks to stimulus measures from the United States – from which Mexico benefits by rising demand for manufactures — a faster expansion of China (8.5%), but held back by “very uneven” access to vaccines.
External economic conditions favor the recovery of Latin America and the Caribbean. Among them, the increase in the price of basic products that the region exports to the rest of the world, which strengthens domestic tax revenues, and the progressive reactivation of international tourism stand out. “International tourist arrivals represent a small proportion of what they used to be before the pandemic in much of the Caribbean, but in recent months they have approached half of pre-pandemic levels in the Dominican Republic. and in Mexico ”, highlights the document.
The pandemic has been especially serious in Latin America, with more than 34 million infections and almost 1.2 million deaths by covid-19. The greater or lesser economic growth will depend on its evolution and the measures taken by governments.
“Cases have risen sharply after slowing down in early 2021. Brazil, in particular, is grappling with outbreaks of variants that have not only infected, but re-infected, people. In the first half of the year, traffic restrictions tightened in countries such as Argentina, Barbados, Brazil, Colombia, Ecuador, Paraguay, Peru and Uruguay, which hurt economic activity, especially in the services sector. Furthermore, vaccination between countries is uneven, ”warns the World Bank. Chile leads the regional immunization campaign, with more than 50% of the adult population vaccinated with two doses, while at the other extreme there are countries such as Paraguay, which still does not reach 10% or Peru, just above.
Looking ahead to 2022, the projection is that GDP growth will slow down like nowhere else in the world. The expected growth of 2.9% contrasts with the 3.9% contemplated for Europe, 3.3% for Sub-Saharan Africa and is a long way from South Asia, the most dynamic region, with an expected advance of 6.8% for next year.
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