According to the Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), Alicia Bárcena, the coronavirus (COVID-19) pandemic will lead to the worst contraction that the region has ever undergone, exceeding those seen in 1914 and 1930.
Based on current statistics, the official said that the average regional contraction of -5.3% is forecast for 2020. She said that this is noted in the Commission’s latest report called Measuring the impact of COVID-19 with a view to reactivation.
Before the pandemic hit, the report notes that Latin America and the Caribbean had already accumulated almost seven years of low growth, with an average of 0.4% between 2014 and 2019. It also noted that the crisis being experienced by the region in 2020, with an expected drop of -5.3% in GDP, will be the worst in all its history. To find a contraction of comparable magnitude, the report notes that one must go back to the Great Depression of 1930 (-5%) or even further back to 1914 (-4.9%).
According to the breakdown in the projections, the organization forecasts that South America will contract -5.2% because several countries will be greatly affected by lower activity in China, which is an important market for their exports. Meanwhile, the decline in Central America is estimated at -2.3%, affected by a drop in tourism and reduced economic activity in the United States, which is its main trading partner and source of remittances. Finally, the Caribbean is seen contracting by -2.5%, due to reduced demand for tourism services.
It was also noted that the biggest impact will be seen in South American countries that specialize in exporting commodities and are therefore more vulnerable to a drop in their prices. Meanwhile, the value of exports from Central America, the Caribbean and Mexico will suffer the impact of a deceleration in the United States’ economy.