Economic growth across Latin America and the Caribbean is predicted to drop by more than 9 per cent and 231 million people are expected to find themselves slip into poverty as unemployment spikes and companies go out of business because of the spreading coronavirus pandemic.
“We’re in the worse crisis in a century,” Alicia Barcena, executive secretary of the United Nation’s Economic Commission for Latin America and the Caribbean, said Thursday.
The Gross Domestic Product “will drop by over 9 per cent, poverty will reach 231 million people out of which 98 million will be in extreme poverty … unemployment will increase to 13.5 per cent, which means that there will be 44 million people who will be unemployed in the region,” she added.
As countries across Latin America and the Caribbean end emergency orders and reopen their economies, regional economists and public health experts say the region risks slipping deeper into crisis and seeing its already troubling inequality widen.
In a new report from the economic commission and the World Health Organization’s Americas office, the Pan American Health Organization, governments are being warned that their economies will only be reactivated if they control the pandemic.
Opening too fast while failing to flatten the epidemiological curve of the novel coronavirus, experts say, risks losing many of the hard-won gains as the pandemic disrupts essential health services, and infections and fatalities continue to surge in parts of the United States, Mexico and South America.
The report proposes a three-phase approach that includes increasing spending on health systems and stepping up social protections to help those living on the margin, and new protocols to protect health gains.
The regional groups and other economists also reiterate calls for development banks and financial institutions like the International Monetary Fund and World Bank to do more to help countries, including middle-income nations in the Caribbean. With many not qualifying for low-interest loans, Caribbean nations are struggling to regain their economic footing after seeing their tourism-dependent economies decimated after closing their borders in March to try to stem the virus.
“We will not be able to do it alone. We do not have the fiscal space to do it and we are spending one-third compared to the developed world to be able to combat poverty and the inequality consequences of the health crisis,” Rebeca Grynspan, an economist and former vice president of Costa Rica, said during a virtual conference Thursday by Florida International University’s Kimberly Green Latin American and Caribbean Center.
“We need the international organizations, the financing world to come to our rescue. We need flexibility. We need long-term financing and we need it to be urgent and quick and enough,” Grynspan said.
According to PAHO, the Americas, which includes 52 countries and territories, has been seeing an average of 140,000 new infections daily in the last week.
As of this week, there have been more than 4.5 million cases of Covid-19 and almost 190,000 deaths in Latin America and the Caribbean.
While countries in the region reacted quickly with lockdowns and closed their borders, transmissions continue to accelerate. Several Latin America countries are at the epicenter of the pandemic, which has ushered in social, health and economic crisis across the region as it ravages health systems, fractures social protections and destabilizes economies.
“Despite vigorous and early action from many countries in the region, Covid-19 has cut thousands of lives short and it has disproportionately affected the poor, those with underlining health conditions and those for whom health care is out of reach,” said Dr. Carissa Etienne, the director of PAHO. “This pandemic has been fueled by inequality and laid bare how people across our diverse regions are being left behind.”
It has showed, she said, the inter-dependency between health, social protection and the economy.
“A stable and produce economy depends on a population that is healthy and well, and a strong economy in turn supports the health and well-being of the population,” Etienne said.
Barcena, the ECLAC executive secretary, said that with Covid-19 exposing a lot of issues in countries in the region, starting with the weakness of health systems, its impact shows the need to coordinate health policies with economic, social and productive policies.
These include testing, contact tracing and public health measures such as quarantine and social distancing, as well as the strengthening of health systems with a focus on primary health care and ensuring compliance with essential public health functions.
“We already had inequality, which became deeper and there is more poverty and social and economic vulnerability,” she said. “And the gap between men and women and ethnic groups has become even greater because of the pandemic.”
Adding one more bleak reality of Covid-19, she noted that as a result of the economic blows, people will also see their purchasing power reduced.
“Companies will be impacted as well and about 2.7 million formal companies will have to go out of business and our exports will drop by 27 per cent,” she said.