Hit hard by the pandemic and facing structural weaknesses, Latin American economies should take longer to recover from the coronavirus, says the International Monetary Fund (IMF).
In a recent blog post, IMF economists forecast that the region’s output will only return to pre-pandemic levels in 2023. In terms of GDP per capita, the recovery process will drag on until 2025.
Regardless, the fund improved its forecast for growth in the region in 2021: up from 3.6 to 4.1 percent. Next year, it expects a 2.9-percent bump. This recovery will be boosted by higher commodity prices and recovery in the U.S., but will not be felt equally across the region. Brazil, Mexico, Chile, and Colombia are expected to bounce back quicker. Still, the IMF warns that these forecasts depend entirely on controlling the pandemic.
However, even if the most optimistic projections are confirmed, it would not be enough to offset the 7.4 percent GDP plunge estimated for 2020. Moreover, the region is also expected to deal with prolonged social consequences of the recession, which is why removing too much fiscal support too early would be detrimental to recovery.
“The crisis had a disproportionately large impact on employment with losses concentrated among women, young, informal, and less-educated workers — with consequences for social indicators,” they wrote. The IMF also pledged support to the area, saying it is ready to lend more than the current USD 66 billion to 21 countries in the area. Argentina is currently negotiating a new lending program focused on balancing financial stability and supporting the most vulnerable populations.Support this coverage →