The US think-tank Center for Economic and Political Research (Cepr) has released a new electronic book entitled ‘Latin America: the post-pandemic decade’, which compiles a series of conversations with 14 researchers and economists Latin Americans on the possible future of the region after the covid-19 pandemic.
The book delves into the problems of Latin America and the bad moment in which the health and economic crisis arrived.
It states that the pandemic came after years of “mostly mediocre” growth compared to world averages.
In addition, it came at a time when progress in the fight against poverty and inequality was stagnating, while the different governments of the Latin countries were finding social expectations increasingly difficult to fulfill.
Because of this, according to the experts in the book, the recession in Latin America was more pronounced and there will probably be greater long-term damage in the loss of education and less employment, problems that could be persistent for a later period.
He also mentions that the pandemic marked two regional deficits that Latin America has had historically, but which are generally overlooked, such as low state capacity and labor exclusion and informality.
It also collects data on growth projections that the International Monetary Fund had before the arrival of the covid and compares them with the latest forecasts, and proposes that the expected production loss in Latin America will be approximately 76% of world GDP in 2019 , or almost 70% more than the global average.
Experts also emphasize the fiscal deficit that caused the pandemic. They conclude that during the global financial crisis, monetary policy bore most of the burden. While the global impact of the covid triggered an unprecedented fiscal response from governments around the world.
The book says that the increase in the fiscal deficit in advanced economies was double that of emerging and middle-income countries, and was five times greater than that of lower-income economies.
According to the professor and dean of the Faculty of Economics and Business at the University of Chile, and one of the book’s analysts, José De Gregorio, the fiscal response in Latin America was quite significant, as it was in almost all parts of the world. world. “However, the response has been heterogeneous in the dimensions of magnitude and time. While expansions in advanced economies will lead to an increase in public debt by around 20 percentage points of GDP between 2019 and 2021, in emerging market economies, as well as in Latin America, this increase will be around 10 points percentage of GDP ”, says De Gregorio.
Regarding the interest rate increases that monetary policy makers will have to implement, De Gregorio assures that it is unlikely that they will reach levels that could cause global financial instability.
However, it says that “even moderate increases in interest rates can be a cause for concern from the point of view of fiscal sustainability, especially in the economies that started the COVID-19 crisis in a weak position, as was the case. from various Latin American countries ”.
For his part, Francisco Ferreira, from the London School of Economics and who also contributed to the preparation of the book, referred to the increase in inequality: “in the absence of a political response, the pandemic had a triple impact on the increase in inequality . Mortality from covid was unevenly distributed, both in Latin America and elsewhere. Those who live in more crowded urban settlements where sanitation conditions are lacking ran a considerably higher risk ”, Ferreira points out.
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