SANTIAGO, Chile (CMC) – The Economic Commission for Latin America and the Caribbean (ECLAC) has warned that, despite projected growth in the region for 2021, it will still be insufficient to reverse the adverse effects of the coronavirus (COVID-19) pandemic.

In a new report, titled, “Recovery Paradox in Latin America and the Caribbean,” ECLAC notes that the average growth estimate for the region in 2021 to 5.2 per cent, “a figure that reflects a rebound from the deep contraction of  six per cent registered in 2020, as a consequence of the adverse effects of the COVID-19 pandemic.

“This expansion, however, will not manage to ensure sustained growth, because the social impacts of the crisis and the structural problems in the region have deepened and will continue to do so during the recovery.”

Presenting the report of the study during a virtual news conference, ECLAC’s Executive Secretary Alicia Bárcena urged regional governments to keep emergency transfer policies in place “to bolster an economic recovery that is sustainable over time, more just, egalitarian and environmentally-friendly.

“We need policies for a transformative recovery with an emphasis on investment; industrial policies and technologies to drive growth in sectors that are more technology intensive and that generate quality jobs; restructure health and education systems; sustain the transfers; universalize basic emergency income; implement bonds to fight hunger; ensure access to a basic digital basket; strengthen support for MSMEs (Micro, Small, and Medium Enterprises); push cross-cutting and sectoral policies to move toward a new model of development,” Bárcena said.

According to ECLAC’s new projections, in 2022, the region will grow 2.9 per cent on average, “meaning a slowdown compared to the rebound in 2021.

“There is nothing to indicate that the low growth dynamic prior to 2020 is going to change. The structural problems that held back growth in the region before the pandemic have become more acute, and this will have negative repercussions on the economic and labour market recovery, despite the uptick in growth in 2021 and 2022,” the report noted.

It said in terms of per capita income, the region “continues on a path toward a lost decade,” and that the current growth rate is unsustainable.

“There exists a risk of returning to mediocre trajectories, with insufficient investment and employment, and major environmental deterioration.

“The crisis brought on by the pandemic has increased inequality and poverty, mainly affecting women, school children and older people. Furthermore, it came at a moment when the regional economy was stagnating, unable to tackle the long-term investment crisis, employment and sustainable productive diversification,” the report added.

The report also recognizes, at the same time, that fiscal measures adopted by the countries have been “significant but insufficient in terms of amount and duration.”

As of June 30, the report notes that region had a death toll of more than 1.26 million due to COVID-19 or 32 per cent of the world total, “despite the fact that the region’s population represents just 8.4 per cent of the world total, and presents major gaps in vaccination rates compared to developed countries.

“To close them will require cooperation and integration,” it said, adding that, in the 30 countries of Latin America and the Caribbean, the percentage of fully vaccinated out of the total population amounts to just 13.6 per cent; while, in the European Union, it is at 34.9 per cent and 46.3 per cent in North America.

In the past year, the report states the rate of extreme poverty has reached 12.5 per cent, with poverty at 33.7 per cent.

The report indicates that emergency transfers to the most vulnerable sectors served to offset the rise in poverty in the region in 2020, going from 189 million in 2019 to 209 million, when it could have been 230 million, and in the case of extreme poverty, from 70 million in 2019 to 78 million, when it could have been 98 million.

These transfers benefited 326 million people, or 49.4 per cent of the population, the report notes, adding that inequality in income distribution increased.

Meanwhile, the report has made reference to the moderate or severe food insecurity which it said had reached 40.4 per cent of the population in 2020, 6.5 percentage points more than in 2019.

“This means there were 44 million more people experiencing moderate or severe food insecurity in the region, with 21 million suffering severe food insecurity,” the report says.

It indicates that, for the period January-April 2021, 20 countries announced or extended emergency transfers of US$10 billion, or 0.26 per cent of gross domestic product (GDP) for 2020.

“If this level of spending is maintained for the remaining months of 2021, annual expenditures in transfers would be only 0.7 per cent of 2020 GDP, that is half of 2020 expenditure: 1.55 per cent of GDP,” the reports cautions.

“Coverage would thus be much lower and reach only 60 million homes – 231 million people and 29 per cent of the population, compared to 326 million and 49.4 per cent of the population reached in 2020,” the report state, adding that the pandemic is leaving 2021 in “a much worse environmental state that will be difficult to reverse.

“Even though there were temporary improvements in air quality and a reduction in greenhouse gas emissions, emissions will increase by 5 per cent this year; while, in 11 countries of the region, a 35 per cent drop was observed in budget or spending for environmental protection in 2019-2020,” the report stated.