Add us as your preferred source on Google to see more of our content in Search.
Add to Preferred SourcesIt will be essential to maintain and deepen active macroeconomic policies to achieve recovery and economic and social transformation after the crisis unleashed by the coronavirus pandemic, ECLAC indicated in a report entitled Economic Survey of Latin America and the Caribbean 2020.
This new edition of the survey, one of the main annual reports produced by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), presents an analysis of the economic effects caused by the pandemic in each country of the region and offers policy recommendations for addressing them, above all in relation to fiscal and monetary matters, while also highlighting the importance of international cooperation.
“The COVID-19 pandemic is having historic negative effects in economic, productive, and social spheres, with lasting consequences and medium-term effects on growth and increased inequality, poverty, and unemployment. That is why the process for economic activity (GDP) to return to its pre-crisis levels will be slower than what was observed during the subprime crisis (in 2007-2008),” Executive Secretary, Alicia Bárcena indicated upon unveiling the document.
According to the report, Latin America and the Caribbean is experiencing its worst economic crisis in a century, with an estimated -9.1% contraction in regional Gross Domestic Product (GDP). As a result, by the end of 2020, the level of GDP per capita will be the same as it was in 2010 – which means that there will have been a 10-year setback, with a sharp increase in inequality and poverty.
In addition, 2.7 million formal businesses are forecast to close in 2020, while unemployment is seen affecting 44 million people (with an increase of 18 million people versus the level seen in 2019, marking the largest surge since the global financial crisis).
Furthermore, poverty is seen reaching the same levels observed in 2005, meaning that it would suffer a 15-year backslide, affecting 231 million people, while extreme poverty is forecast to reach 1990 levels, entailing a 30-year setback and affecting 96 million people.
“In this scenario, active macroeconomic policies will be needed to resume growth and to promote an agenda for structural transformation. Public revenue must be strengthened, conventional and non-conventional expansionary monetary policies must be maintained, and macroprudential regulation must be bolstered along with the regulation of capital flows to preserve macro-financial stability in the short and medium-term. International cooperation is fundamental here to expand macroeconomic policy space,” ECLAC’s highest authority explained.
Read the report: Economic Survey of Latin America and the Caribbean 2020. Main conditioning factors of fiscal and monetary policies in the post-COVID-19 era.
Original source: ECLAC