The economic recovery in Latin America and the Caribbean will be “slight” compared to other regions of the world and will have “various speeds”, with large differences between exporting countries and those dependent on tourism, stressed this Tuesday the International Monetary Fund (IMF).
“After a sharp decline in 2020 a mild and multi-speed recovery is expected in Latin America and the Caribbean in 2021 “the Fund noted in its new Global Economic Outlook (WEO) report.
According to your forecasts, Latin America will grow in 2021 at a rate of 4.6%, half a point above the IMF forecast for January.
“Much to do” in Argentina
In their analysis, the experts explain that the expected development for this year It is due in large part to the growth of the large exporting countries in the region, such as Argentina, Brazil and Peru, that have been positively impacted by the rebound in world manufacturing in the second half of 2020.
However, the Fund’s chief economist, Gita Gopinath, assured that there is “much to do” for the macroeconomic stabilization of Argentina, one of the countries that currently has a rescue program from the multilateral organization.
“Argentina faces very important challenges, since inflation is very high ”and“ it is not yet very clear ”how this indicator will evolve. For this reason, “much remains to be done in terms of macroeconomic stabilization,” Gopinath said at the press conference presenting the IMF report.
Foreign trade in Latin America had its worst performance in 2020 since the Great Recession (2008), collapsing 13%, but the drop was 10 points less than expected due to the rebound in demand in the main partners of the region, especially China, according to a study by the Economic Commission for Latin America and the Caribbean (ECLAC).
The three great economies of Latin America, Brazil, Mexico and Argentina will grow this year 3.7%, 5%, and 5.8%, respectively, according to the IMF.
Other Latin American countries, such as Colombia, Chile and Peru, will see growth of 5.1%, 6.2%, and 8.5%, respectively, the organization said.
On the contrary, Venezuela will continue its decline and suffer a new economic contraction, in this case of 10%.
Brazil and Mexico, benefited by the US stimulus packages
Regarding the main economies of the region, Gopinath and the deputy director of the IMF’s Research Department, Petya Koeva Brooks, argued that the Brazilian and Mexican economies will be one of the “main beneficiaries” of the fiscal stimulus package launched by President Joe Biden. In U.S.A.
“Mexico will be one of the main beneficiaries of the Biden Administration’s $ 1.9 trillion rescue package”, Said Gopinath in this regard, after Brooks, also present at the press conference, affirmed the characteristic of Brazil.
Despite the positive impact of the US fiscal stimulus, Gopinath considered that Brazil’s priority should be vaccination, whose rate “should be much higher than the current one”.
In this regard, the IMF also warns in the report that the longer-term outlook “continue to depend on the trajectory of the pandemic”.
“With some exceptions – such as Chile, Costa Rica, Mexico – most countries have not obtained enough vaccines to cover their populations”, highlights the multilateral organization in its document, which analyzes the economic outlook for the whole world.
The Caribbean continues to be affected by the lack of tourism
Beyond the large economies of the region, the IMF lowered the 2021 projections for the Caribbean region, highly dependent on tourism, one of the sectors most affected by the coronavirus pandemic globally.
Thus, the Fund cut its forecast for the Caribbean by 1.5 points, up to 2.4%.