The UN estimated that the GDP of Latin America and the Caribbean fell by 8% in 2020 and will grow by 3.8% in 2021

The UN warned this Monday that the economic recovery from the crisis caused by COVID-19 will be fragile and uneven in Latin America and the Caribbean, and warned of the risk that several countries run of facing problems of sustainability of their sovereign debt.

In your new economic forecast report, the organization predicts a growth of 3.8% in the region during 2021 and 2.6% in 2022. The current year figure is less than half of the 8% contraction estimated for 2020 as a consequence of the pandemic.

The United Nations described last year’s crash as one of “Historical proportions”, consequence of the combination of health measures to combat the virus, the reduction in exports of raw materials and the collapse of tourism that caused the coronavirus.

The stimulus plans of several governments in the region, together with a slight rebound in world economic activity, have allowed a “modest” recovery to begin in the second half of 2020, But the report warns that pre-crisis activity levels will not be reached until the end of 2023.

That fragile recovery carries numerous risks, including the danger of a “lost decade” in terms of economic growth and development, according to the United Nations.

The UN also warned about the risk of political instability and potential debt crises in several countries and issued a new call for creditors to extend debt relief measures to middle-income nations and not just the poorest. This request has been reiterated by different organizations such as the World Bank, while the G20 approved in November a debt renegotiation program for countries with fewer resources.

In this regard, the UN highlighted that in almost one out of every five developing and transition economies, the public deficit stood in double digits in 2020 as a percentage of gross domestic product and that the slow recovery will continue to make it difficult to stabilize the accounts.

The UN headquarters in New York (Photo: Reuters / Carlo Allegri) 

For now, the organization indicates that austerity is not an option, as it would create unnecessary damage, both economic and social.

At the national level, the UN expects Venezuela’s economy to contract again in 2021, with a 7% decline after a 30% drop in 2020, while in most of the region it expects moderate rebounds, which will be far from offsetting last year’s losses.

That is the case of Argentina (expected to grow 4.9%), Bolivia (5,1%), Brazil (3,2%), Chile (5%), Colombia (5%), Paraguay (3,5%), Uruguay (4,5%), Mexico (3.8%) and the majority of Central American and Caribbean countries.

For some states that have suffered especially from the crisis, the UN expects higher growth in 2021, as is the case in Peru (9%), while in others such as Ecuador (1.6%) will be much more limited.

The projections for Latin America are framed in a global report, in which the organization estimated that the economy will grow 4.7% globally this year. In parallel, he indicated that the 2020 contraction was 4.3%, which reflects that the region was one of the most affected by the pandemic.

Inequality, the report said, is also increasing among countries as a result of huge stimulus packages from richer states, which put them on a much faster recovery path than nations with fewer resources, which have been unable to act with the same forcefulness.

The UN estimates that 131 million people fell into poverty in 2020, with women and girls especially affected, while the richest of the rich have seen their fortunes rise during the pandemic.