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COVID-19: Millions of job losses, poverty forecast for Latin America, Caribbean

Jacqueline Charles, Miami Herald on

Published in Business News

The informal economy is the lifeblood of Latin America. Now it's under threat by the coronavirus.

Economic growth across Latin America and the Caribbean is predicted to drop by more than 9% and 231 million people are expected to find themselves slip into poverty as unemployment spikes and companies go out of business because of the spreading coronavirus pandemic.

"We're in the worse crisis in a century," Alicia Barcena, executive secretary of the United Nation's Economic Commission for Latin America and the Caribbean, said Thursday.

The Gross Domestic Product "will drop by over 9 percent, poverty will reach 231 million people out of which 98 million will be in extreme poverty ... unemployment will increase to 13.5 percent, which means that there will be 44 million people who will be unemployed in the region," she added.

As countries across Latin America and the Caribbean end emergency orders and reopen their economies, regional economists and public health experts say the region risks slipping deeper into crisis and seeing its already troubling inequality widen.

In a new report from the economic commission and the World Health Organization's Americas office, the Pan American Health Organization, governments are being warned that their economies will only be reactivated if they control the pandemic.

 

Opening too fast while failing to flatten the epidemiological curve of the novel coronavirus, experts say, risks losing many of the hard-won gains as the pandemic disrupts essential health services, and infections and fatalities continue to surge in parts of the United States, Mexico and South America.

The report proposes a three-phase approach that includes increasing spending on health systems and stepping up social protections to help those living on the margin, and new protocols to protect health gains.

The regional groups and other economists also reiterate calls for development banks and financial institutions like the International Monetary Fund and World Bank to do more to help countries, including middle-income nations in the Caribbean. With many not qualifying for low-interest loans, Caribbean nations are struggling to regain their economic footing after seeing their tourism-dependent economies decimated after closing their borders in March to try to stem the virus.

"We will not be able to do it alone. We do not have the fiscal space to do it and we are spending one-third compared to the developed world to be able to combat poverty and the inequality consequences of the health crisis," Rebeca Grynspan, an economist and former vice president of Costa Rica, said during a virtual conference Thursday by Florida International University's Kimberly Green Latin American and Caribbean Center.

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