COVID-19 can provoke "another lost decade" in Latin America

The director of the Western Hemisphere of the International Monetary Fund (IMF), Alejandro Werner, warned this Thursday that the pandemic of the new coronavirus may cause "another lost decade" in Latin America due to its estimated economic impact on the region.

"The region has before it the specter of another lost decade between 2015 and 2025," Werner, the head of Latin America for the Washington-based multilateral organization, warned at a virtual press conference.

The economy of Latin America and the Caribbean will decrease by 5.2% this year due to the impact of the current health crisis, a deeper decline than that of the world economy, which will fall by 3%, according to forecasts presented this week by the IMF.

"As the pandemic continues to spread throughout the region, countries face the worst economic recession since national accounts statistics began to be produced in the 1950s," stressed Werner.

In his comments to the press, he argued that the "complex external environment" and the "necessary measures to contain the pandemic" have caused a collapse of economic activity throughout Latin America.

The economies of Mexico and Ecuador will this year be the most affected in Latin America by the crisis of the coronavirus pandemic, which will affect supply chains and internal and external demand in the region, among other factors.

In addition to Mexico and Ecuador, Brazil (5.3%), Argentina (5.7%), Chile (4.5%) and Venezuela (15%) will also see their economy contract sharply.

Those who will least notice the drastic reduction in economic activity in 2020 will be Paraguay, with a retraction of 1%; Colombia, with 2.4%; and Bolivia, which will register a 2.9% drop.

"Given the drastic contraction in 2020 and as countries adopt policies to contain the pandemic and shore up their economies, a marked recovery can be expected in 2021. But even in this scenario of rapid recovery, the region has before it the specter of another decade lost 'during 2015–25, "he reflected.

On the other hand, Werner said that several countries in the region cannot access the necessary resources to cover the enormous needs for external financing at this time.

So far, of the approximately 100 nations that have requested emergency financing from the IMF, 16 are from Latin America and the Caribbean.

"Other countries in Latin America and the Caribbean have requested new programs or the expansion of developed programs, such as Honduras," he added.

The agency celebrates this week, together with the World Bank, its traditional spring assembly, but this time it will adopt a virtual format due to the pandemic of the new coronavirus.


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