IMF raises growth projection in Latin America in 2021, warns of insufficient vaccines

Apr 6 (Reuters) – Latin American economies will show slightly better-than-expected growth in 2021 thanks to a rebound in activity among commodity exporters, although the recovery looks mixed and the lack of COVID vaccines will continue to be a drag the International Monetary Fund said Tuesday.

In its World Economic Outlook report, the IMF estimated a 4.6% expansion for Latin America and the Caribbean this year, an improvement of 0.5 percentage points compared to the anticipated estimate in January. In 2022, the region will grow by 3.1% after suffering a contraction of 7% last year.

The revision compared to the official October report implies a 1 percentage point increase in the expansion of regional GDP, driven by the recovery of global activity, the partial reopening of economies after the COVID emergency and the start of vaccination programs in rich and developing nations.

Brazil, the main Latin American economy, will show an advance of 3.7% this year, a positive adjustment of just 0.1 percentage points in view of the marked impact of the pandemic and after seeing a decline of 4.1% of GDP in the 2020, the Fund said. In 2022, an expansion of 2.6% is expected.

The report also adjusted the growth projection for Mexico, to 5% during this year and 3% in 2022. The refloat is outlined by the country’s export capacity and its strong commercial ties with the United States, where one of the fastest rates of expansion in at least four decades.

“After the drastic decline in 2020, only a moderate recovery and uneven growth rates are expected in Latin America and the Caribbean in 2021,” the report said, in a scenario that takes off from the robust improvement in global economic projections.

The disparity in the region with its efforts to emerge from the crisis occurs at a time when many countries face new pandemic waves that are putting their health systems on the brink of collapse. South America is currently facing an outbreak of COVID cases and deaths worse than last year.

“With some exceptions, for example Chile, Costa Rica and Mexico, most countries have not secured enough vaccines for all of their populations,” said the IMF, which called for reinforcing contributions to distribute COVAX vaccines among nations. of low resources.

The Washington-based body, however, predicted a strength in prices and demand for raw materials for the coming months – especially oil and base metals – that will continue to benefit nations such as Mexico, Peru, Chile and Argentina. .

The Argentine economy, which contracted 10% last year according to the Fund’s calculations, will expand 5.8% in 2021 and moderate activity to 2.5% the following year, the report said.

The outlook drew attention to the increase in inequality in the months of the pandemic and estimated that 95 million people fell into extreme poverty in the world in 2020.