The Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), Alicia Bárcena, highlighted the key role that the private sector – and chambers of commerce in particular – and regional integration play in the economic recovery from the coronavirus crisis.
In her remarks, ECLAC’s Executive Secretary underscored that the current crisis will be longer and deeper than expected, and because of the uncertainty that it creates, it will take several years to be able to recover.
“If we consider the average rate of growth of the past decade, of 1.8%, regional GDP will only return to 2019 levels in 2025,” she explained.
The pandemic has revealed and amplified the region’s structural gaps, such as inequality and low productivity, Alicia Bárcena indicated. To cope with such effects, ECLAC has made a series of proposals for the short and medium-term, including an emergency basic income (equivalent to one poverty line), an anti-hunger grant (for people living in extreme poverty), a digital basket that would allow for bridging the gap of 40 million households in the region that do not have adequate connectivity, and the deepening of regional integration and international cooperation since the fiscal efforts of national governments – which have invested 4% of GDP on average to date and 10% in credit guarantees for companies – will not be enough.
“Globally, the pandemic is reinforcing two interrelated trends: the first is a shift towards less interdependence in production, trade and technology among the world’s major economies, particularly between the United States and Europe on the one hand, and China, on the other. The second is that world trade is less open and more influenced by geopolitical and national security considerations, with more frequent disputes and with weakened multilateral governance,” she indicated.
The pandemic has also revealed the weakness of intraregional trade, Bárcena continued, which “will collapse” this year, reaching just 11%, the same level seen in the 1980s.
To this end, it is necessary to put emphasis on trade facilitation, infrastructure and logistics, and to promote investment in dynamic sectors such as renewable energy and the digital economy, she added. The harmonization and homologation of technical capabilities is also necessary, especially in the free trade agreements already implemented in the area of the Pacific Alliance and in Central America with Mexico.
With regard to digital matters, Bárcena underlined that the private sector must be included in order to close the big infrastructure gaps that still remain and that, for example, keep 32 million children in the region from being able to access tele-education.
With regard to stimulating job creation to reactivate the cycle of production, income and consumption, ECLAC’s Executive Secretary recalled that the organization has proposed measures such as co-financing the payrolls of the 2.6 million micro, small and medium-sized enterprises that have been affected by the crisis, through soft loans and extended grace periods for medium-sized companies as well as bailouts for large companies on certain conditions, such as that they not use tax havens or redistribute earnings among shareholders.
“We must also move towards universal social protection and protecting the most vulnerable groups, such as older people and women, who have been the most affected by the pandemic due to their extra burden of both paid and unpaid care work,” she indicated. “In addition, labor formalization is one of the drivers of growth: we have 159 million informal workers in the region (54% on average), so that they can access social protection and health programs, which are urgent at this time.”
Alicia Bárcena emphasized that the crisis is hitting the most technologically dynamic industrial sectors the hardest, which serves to deepen the region’s structural problems.
Original source: ECLAC
