With the arrival of the second wave of coronavirus, a strong debate was once again on the table that opens at least two positions: those who defend quarantines and closures to stop infections, with the aim of avoiding the collapse of the health system. And on the other hand, those who speak of the economic contraction and unemployment.
According to data compiled by the consulting firm Bakertilly, from the latest reports and projections released mainly by the International Monetary Fund, Latin America was “highly affected by the pandemic.” “Although there are cases such as Paraguay and even Guatemala that had a lesser economic impact, or specifically Chile, with its successful management, which could fully recover in 2021, most countries did not have the same luck,” the report details. And adds that “Countries like Honduras, Ecuador, El Salvador, Panama and even Argentina, would not fully recover until after 2022.
Of the hardest hit, Argentina would not reach pre-pandemic economic levels until after 2022. “More than a year after the pandemic, the impact we have suffered worldwide continues to be a recurring theme today,” says the consultant. And he adds: “Each country has suffered different consequences depending on of geography, the behavior of the population, the capacity of health systems to face excessive occupancy and now recently, by the availability of vaccines and the speed of their application “.
Specifically in Argentina, the GDP fell 10% last year. The projections of this year, show a growth of 5.8% while the next one will only reach 2.5%. “In other words, these numbers are not enough to compensate for the losses caused “, details the consultant.
In Argentina, GDP fell by 10% last year
Regarding the impact at the regional level, various scenarios are handled, some optimistic and others not so much. However, the Inter-American Development Bank and the World Bank estimate that growth in Latin America would be in 2021 between 4.1% and 4.4% as a rebound effect of the 7.3% decrease in 2020. So the challenge for the region is very great. On the one hand, to achieve immunity with the scarce resources that Latin America has always had, and at the same time, to recover the economy as quickly as possible.
And all this is related, according to the consultant, with the mortality rates that the region is suffering. Bakertilly presented an analysis of the Latin American countries, where he has taken the mortality indicators per 100,000 inhabitants, which have been published, either through a registry of deaths detected by COVID-19, or by a calculation of the excess of general mortality , which is an indicator that could be more complete..
The World Bank’s Vision
In its semi-annual report on the economy in the region, the World Bank projects for Argentina a GDP expansion of 6.4% this year, which will be followed by growth of 1.7% in 2022 and 1.9% in 2023.
In this way, the 9.9% drop in gross domestic product in 2020 will take three years to recover to the pre-pandemic level.
Nations such as Brazil, Chile, Uruguay, Costa Rica, Panama, Peru or Bolivia, may recover from the downturn next year, while the case of Paraguay surprises, that last year it registered a fall of barely 1.1% and this year it will already grow 3.5%.
At the level of projections, the multilateral organization recognizes that in the fourth quarter of 2020 a virtuous process began to take place in Argentina, with an increase of 5.5% in the final section of the year, which will have a carryover in 2021, with greater activity and use of industrial installed capacity.
Furthermore, he argues that “price and capital controls are a risk of slowing down investment and the renewal of social capital”, and then, “GDP is expected to reach its level at the end of 2019 only in 2023.”
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