Despite a prediction of great gains for Guyana in the region of 56.4 per cent, the Economic Commission for Latin America and the Caribbean (ECLAC) is expecting growth in the Caribbean to contract by 2.5 per cent.
In a virtual press conference transmitted live from the United Nations regional headquarters in Santiago, Chile, last week Tuesday, ECLAC’s Executive Secretary Alicia Bárcena revealed the new growth projections for each of the commission’s member countries, which she extracted from the COVID-19 Special Report No. 2: “Measuring the impact of COVID-19 with a view to reactivation”.
“The effects of COVID-19 will cause the biggest recession that the region has suffered since 1914 and 1930.”— Economic Commission for Latin America and the Caribbean Executive Secretary Alicia Bárcena
Overall, the report predicts that economic growth in Latin America and the Caribbean will shrink by 5.3 per cent. It said, however, that before the pandemic hit, Latin America and the Caribbean had already accumulated almost seven years of low growth, with an average of 0.4 per cent between 2014 and 2019.
The report revealed, in addition, that the region feel the “transmission” of the COVID-19 crisis in five areas: a reduction in international trade, a fall in commodities prices, the intensification of risk aversion and worsening of global financial conditions, lower demand for tourism services, and a reduction in remittances.
“The effects of COVID-19 will cause the biggest recession that the region has suffered since 1914 and 1930. A sharp increase in unemployment is forecast, with negative effects on poverty and inequality,” Bárcena shared during her presentation.
Though countries have activated stimulus packages to boost their economies, the executive secretary asserted that it is equally important for them to have access to financial resources “based on the flexible support of multilateral financing organisations”. Among the resources countries in the region can consider are: low-cost credit lines, debt servicing relief, and possible debt forgiveness.
“The leaders of the G20 should be in favor of multilateral organizations making loans at favorable interest rates and alleviating the debt of countries that are highly indebted, deferring it or forgiving it. If that does not occur, the payments will be impossible and fiscal space will be compromised. Exceptional measures are required to confront an unprecedented crisis. There will be no progress without international cooperation and solidarity,” Bárcena underscored.
She noted that an important tool to combat the effects of the COVID-19 crisis is integration, adding that it will be as significant when the pandemic has passed.
“In addition, the region’s integration model and alternatives for recovery must be rethought in light of the structural changes that will occur to globalization and the world post-COVID-19,” Bárcena noted.
“To have an impact in the new global economy, the region must move towards greater regional integration in terms of production, trade and technology. Our countries’ coordination on macroeconomic and production matters is crucial for negotiating the terms of the new normal, particularly with regard to an urgent aspect of the current crisis and in the medium term: the issue of financing for a new development pattern with equality and environmental sustainability,” she added.
In terms of projections, the report noted that the Caribbean will contract by -2.5 per cent due to reduced demand for tourism services. Furthermore, like Mexico and Central America, the Caribbean will feel the effects of a deceleration in the United States’ economy.