The world economy has been hit hard by the global COVID-19 pandemic. The collapse in international oil prices, tourism industry, import-export businesses, manufacturing, retail and hospitality sectors, among others, has affected the economy of all countries across the globe. Lockdowns, business shutdowns, border closures, etc., due to the coronavirus outbreak have brought domestic and international economic activities to a near-standstill. Millions of people have lost their jobs worldwide.
The International Monetary Fund (IMF), on April 14, in its latest forecast said that the world economy would suffer its worst year since the Great Depression of the 1930s. According to the IMF, the global economy is poised to shrink by 3% this year.
Rates of infection have still not reached the levels of the US and Europe in Latin America and the Caribbean region, but the region is already feeling the impacts of the socio-economic crisis due to the pandemic. The World Bank (WB), in its report called “The Economy in the Time of the Covid-19,” published on April 12, estimated a sharp drop of 4.6% in the Gross Domestic Product (GDP) of the region in 2020 due to the impact that the pandemic has had on the world economy.
According to the report, Mexico and Ecuador will be the most impacted countries with a decline of 6% in their GDP. Following the top two are Argentina with a loss of 5.2% of the GDP, Brazil with a 5% fall, Peru with 4.7%, Nicaragua with 4.3%, Bolivia with 3.4%, Costa Rica with 3.3%, Chile with 3%, Uruguay with 2.7%, Honduras with 2.3%, Colombia and Panama, both with 2%. The economy of the Dominican Republic is expected to remain stable, while Guyana is the only country to experience a growth of 51.7%, due to the recent discovery of a large amount of crude oil off its shores.
The WB also predicted that the region would recover in 2021, with a growth of 2.6%, if the governments manage to preserve jobs.
On April 8, the International Labor Organization (ILO), highlighted in a report the already catastrophic effect that the coronavirus outbreak has had on the working class around the world. The ILO predicted that over 195 million jobs were threatened by the novel coronavirus globally and stated that around 2 billion people working in the informal sector had already been affected by the pandemic.
The report revealed that in Latin American and the Caribbean particularly, over 14 million full-time workers could lose their jobs. Regional Director for the ILO, Vinícius Pinheiro, urged the governments to take “more ambitious measures to preserve jobs, encourage businesses and protect incomes.”
At the beginning of this month, on April 1, the Inter-American Institute for Cooperation on Agriculture (IICA) warned about the scarcity of food in 20 Latin American and Caribbean countries that are net importers of food. In the face of the pandemic, when international borders and trade are shut for an uncertain period of time, the shortage of food can have serious consequences, especially for the poor and marginalized population in these countries. In this regard, the Director of the IICA, Dr. Manuel Otero, called on the regional governments to begin working on “food security measures and increase self-sufficiency,” despite the health crisis.
Last month, on March 20, the United Nations Economic Commission for Latin America and the Caribbean (UNECLAC), estimated a 1.8% contraction in regional GDP. The UNECLAC predicted that this could raise unemployment by 10% and the number of people living in poverty could increase from 185 million to 220 million, while people living in extreme poverty could increase from 67.4 million to 90 million. In this respect, the executive secretary of the UNECLAC, Alicia Bárcena, called on the governments to take urgent action to address the health, social and economic emergency, strengthen regional coordination and integration to secure goods supply chains and trade, alleviate poverty and promote the reduction of inequality.
The same day, the Latin American Strategic Center for Geopolitics (CELAG) requested the International financial institutes, such as the IMF, the WB, the Inter-American Development Bank (IDB) and the Corporación Andina de Fomento (CAF), to forgive the sovereign external debt of the Latin American countries, in order to strengthen social policies to deal with the current pandemic without having to worry about meeting their debt repayment obligations. The CELAG also urged international private creditors to accept an immediate debt restructuring process that contemplates an absolute no interest charge and a two-year default.
Regional initiatives
On April 10, the Puebla Group, a political and academic forum made up of progressive presidents, former presidents, political and social leaders from around the world, held a video-conference to discuss and coordinate strategies to face the economic and social crisis that Latin America is experiencing due to the COVID-19.
The meeting was attended by 40 representatives from Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, Spain, Mexico, Panama, Paraguay, Peru, the Dominican Republic and Uruguay.
Several socialist and progressive leaders of the region, such as Argentine President Alberto Fernandez, former Ecuadorian President Rafael Correa, former Colombian President Ernesto Samper, former Brazilian presidents Luiz Inácio Lula da Silva and Dilma Rousseff, former Bolivian President Evo Morales and Vice-President Alvaro Garcia Linera, among others, called on the international financial and political organizations to globalize solidarity in the times of a global pandemic, end blockades, lift sanctions and forgive the external debt worldwide.
The leaders also ratified to strengthen cooperation, unity and solidarity among regional social organizations and governments in the face of the pandemic.
The Caribbean Community, Caricom, an organization of the 15 Caribbean nations, has called for an emergency summit today, April 15, to analyze the state of the COVID-19 in the region and outline strategies to face the pandemic.
The novel coronavirus began to expand rapidly in the region in the month of March. Today, the region has more than 72,000 confirmed cases of COVID-19 and more than 2,500 deaths.
