SANTIAGO, Chile (CMC)— The Economic Commission for Latin America and the Caribbean (ECLAC) forecasts that while Latin America and the Caribbean will experience positive growth in 2021, it will still not be enough to recover from the pre-COVID-19 pandemic levels of economic activity. 

In a new report unveiled on Wednesday, ECLAC said the region will experience a contraction of -7.7 per cent in 2020 but will have a positive growth rate of 3.7 per cent in 2021 “due mainly to a statistical rebound that will, nonetheless, be insufficient for recovering the economic activity levels seen prior to the coronavirus pandemic (in 2019).”

ECLAC’s “Preliminary Overview of the Economies of Latin America and the Caribbean 2020” – one of the United Nations organisation’s flagship annual reports – was released during a virtual press conference by ECLAC Executive Secretary Alicia Bárcena.

According to the document, in a context of global contraction, “Latin America and the Caribbean is the region in the developing world that has been hardest hit by the crisis stemming from COVID-19.”

In the decade prior to the pandemic, the report says the region was on a low-growth trajectory, and that, in 2020, “it faces an unprecedented combination of negative supply and demand shocks, which is translating into the worst economic crisis in the last 120 years.

“Although the significant fiscal and monetary efforts made by countries have served to mitigate the effects of the crisis, the pandemic’s economic and social consequences have been exacerbated by the structural problems that the region has suffered historically,” the report stated. 

In 2021, the report foresees a positive gross domestic product (GDP) growth rate that will “fundamentally reflect a statistical rebound, but the process of recovering pre-crisis levels of GDP will be slow and will not conclude until 2024.” 

“The growth dynamic in 2021 is subject to high uncertainty related to the risk of renewed outbreaks of the pandemic, the agility with which vaccines are produced and distributed, and the capacity to maintain fiscal and monetary stimulus to support aggregate demand and productive sectors,” Bárcena said. “Making progress on sustainable and inclusive growth necessitates a productive transformation towards environmentally sustainable sectors, which would favour job creation and technological innovation.” 

She said “the region’s weaknesses and structural gaps, its narrow fiscal space, inequality, limited coverage and access to social protection, elevated labour informality, productive heterogeneity and low productivity are central to understanding the extent of the pandemic’s effects on the region’s economies, their difficulties for implementing policies that would mitigate those effects, and the challenges they face in undertaking a sustainable and inclusive economic reactivation.” 

Before the pandemic, the ECLAC chief said the region already had low economic growth: 0.3 per cent on average in the 2014-2019 period, with a 0.1 per cent rate notched in 2019. 

“With the arrival of the pandemic, this low economic growth was compounded by negative external shocks and the need to implement policies aimed at confinement, physical distancing and the suspension of productive activities, which meant that the health emergency ended up prompting the worst economic, social and productive crisis that the region has ever lived through,” Bárcena said. 

She said the contraction in economic activity has been accompanied by “a significant rise in the unemployment rate,” which is forecast at around 10.7 per cent in 2020; a “steep fall” in labour participation; and a “considerable increase” in poverty and inequality.