The Latin American economies They will suffer their biggest contraction since at least 1960 due to the pandemic, according to an IMF forecast issued on Tuesday, with a reactivation in 2021 that will largely depend on the ability of governments to control the health crisis and social risks.
In your report World Economic Outlook (WEO) October, International Monetary Fund it anticipated a contraction of the Latin American economy of 8.1%, less profound than the 9.2% it had forecast in June, but it slightly moderated its expansion projection for next year to 3.6%.
The fall this year will far exceed the 2.5% decline in 1983, in the midst of the external debt crisis, and the 1.9% of the financial debacle at the end of the last decade, according to figures from the world Bank dating back to 1960.
The forecasts, although they suppose exorbitant production losses, have been moderating for Latin America due to the accelerated rebound of its two main trading partners, China and the United States, in the last quarter.
“Smaller countries and economies dependent on raw materials and tourism are in a particularly difficult position,” the IMF said in a statement, drawing attention to the complex scenario for Caribbean nations and the air transport industry.
The IMF softened the crisis outlook for the largest economies in the region, especially in countries that were not strict in containing the virus. Despite warnings about the need to take comprehensive measures to control the epidemic, projections point to progress where economies had fewer shutdowns.
Mexico, which relies heavily on trade with United States and inaugurated a new treaty in July with its North American neighbors, will have a drop in Gross Domestic Product of 9% this year, an improvement of 1.5 percentage points over the previous forecast. By 2021, the fund expects a 3.5 percent expansion.
Brazil, meanwhile, will suffer a less pronounced drop in GDP of 5.8% by 2020, a significant change from the June estimate of a 9.1% drop. Expansion next year will be moderate, 2.8%, affected by lower domestic demand that hits its powerful services sector.
Extreme poverty and disparity
The report highlighted that China – a key source of income for the region due to its high consumption of raw materials – is preparing to close the year with a slight expansion, also resuming demand for exports. Brazil, Peru, Chile and to a certain extent, Mexico, will be the beneficiaries.
Although the IMF moderated recession outlook for Chile and Peru in 2020, as mining activity resumed and industrial metal prices rise, insisted that the outlook in South America remains complex in view of the prevalence of coronavirus cases.
Argentina, which has taken rigid measures to control the advance of the pandemic and seeks to prepare for its lack of refinement, will see a collapse of 11.8% of its economy in 2020 and will grow by 4.9% in 2021, the agency projected, reflecting the blow of the closures in a country that has suffered years of fiscal crisis.
Although it did not refer specifically to any country, the IMF warned in its report that Covid-19 will reverse the progress that the world has made in the world since the 1990s. reduction of poverty and inequality.
The world economy will shrink just 4.4% this year, much less than was feared at the height of the pandemic, but disparities in the rebound will be accentuated in nations with the greatest social vulnerability, including emerging economies, the fund stressed.
“About 90 million people could fall below the income threshold of $ 1.90 this year, which is an extreme shortage,” he said, citing data provided by the World Bank.
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