One year after the outbreak of the coronavirus crisis, radical uncertainty remains the dominant note, but some things can already be taken for granted. Latin America and the Caribbean will be among the hardest hit regions in the world, both in terms of health – with Brazil and Mexico among the worst hit countries – and economically. The bloc, however, will fall somewhat less than originally expected and will recover slightly faster: in 2020 activity plummeted 6.7%, compared to 7.9% that the World Bank projected at the end of year, and this 2021 the rebound will be 4.4%, four tenths more than expected so far. This improvement will allow it to recover the pre-pandemic GDP level at the end of 2022 and not throughout 2023, as was projected until now.
The claw and subsequent recovery is anything but symmetrical. Guyana on the sidelines, a country boosted by an untimely oil miracle that has allowed it to grow at double digits even in the midst of the pandemic, Paraguay and Guatemala will be the only two countries in the bloc that will manage to return to the levels of 2019 this year, a feat if the magnitude of the economic crater left by the coronavirus is taken into account.
Following are the countries that, like the regional average, will reach December 31, 2022, having completely closed the wound opened by covid-19 in GDP: Brazil, Chile, Colombia, Peru, Uruguay, Costa Rica, Republic Dominicana, Saint Vincent and the Grenadines. And those that, such as Mexico, Bolivia, Panama, El Salvador, Honduras or Nicaragua, will completely restore the level of pre-ndemic activity throughout 2023.
The rest – except Venezuela, which as on previous occasions is not included in the World Bank’s forecast table – will have to wait, at the earliest, until 2024 to close the gap: Argentina and Ecuador (both rescued by the fair International Monetary Fund). before the crisis broke out), Haiti, Jamaica, Bahamas, Barbados, Belize, Dominica, Saint Lucia and Suriname, according to the World Bank forecast. In these countries, the scars will be greater both in economic terms and in social terms, an aspect in which this crisis has hit the region with particular virulence.
“The crisis will have a long-term impact on the economies of the region”, warn the technicians of the multilateral, who see “probable” that the lower levels of learning and employment will reduce future income. And that he fears that the high level of public and private indebtedness “could cause tension in the financial sector and slow down the recovery.”
Regardless of the major challenges facing the bloc, the World Bank sees “positive areas”: international trade has remained afloat – and has recovered much earlier than expected – despite the sharp drop in trade in services and the collapse of tourism; In the heat of China’s recovery, a good part of raw materials have already returned to the level before the health crisis — something important for Latin America: many of its countries depend on the sale of basic products to balance their public accounts; and remittances, vital for many families in Mexico and Central America, have not only not collapsed as expected, but are already above the 2019 figures.
Furthermore, unlike in previous crises, the financing tap remained open for most of the bloc countries. And the additional public spending they have incurred has been earmarked for the highest priority: strengthening health systems, providing transfers to households and helping companies avoid bankruptcy.
“This pandemic has given rise to a process of creative destruction that can result in faster growth, but that can also widen inequality within and between countries in the region,” stressed Martín Rama, World Bank Chief Economist for Latin America and the Caribbean. The biggest transformation, he says, may come from accelerated digitization, which could lead to greater dynamism in financial intermediation, international trade and labor markets. The crisis will leave much bad behind, but also a handful of opportunities that the countries of the area will have to take advantage of.
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Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.