Coronavirus pandemic to provoke worst-ever recession in Latin America

Latin America is set for its worst ever recession with a fall in GDP of 5.3 percent in 2020 due to the coronavirus pandemic, a UN body said on Tuesday.

The United Nations Economic Commission for Latin America and the Caribbean (CEPAL) said the last time the region had seen "a contraction of a comparable magnitude, you need to go back to the Great Depression of 1930 (minus five percent), or even further to 1914 (minus 4.9 percent)" and the start of World War I.

Before the coronavirus struck, the region had experienced seven years of slow growth with an average of 0.4 percent from 2014 to 2019.

According to CEPAL, in the entire region only the Dominican Republic's economy will remain stable in 2020, all the others will fall.

Venezuela's is expected to be the worst hit economy with an 18 percent contraction, followed by Argentina, Mexico and Ecuador, with 6.5 percent.

South America, due to fall 5.2 percent, will be worse hit than Central America or the Caribbean "due to several countries being badly affected by the fall in China's activity, which is an important export market."

Central America, which will decrease by 2.3 percent, is due to suffer from "a fall in tourism and the reduction of activity with the United States, its main commercial partner and source of remittances." 

The Caribbean will also face a drop in tourism and 2.5 percent fall in its GDP.

Poverty in Latin America will rise from 30.3 percent to 34.7 percent, an increase of 29 million people, in 2020, while unemployment will jump from 8.1 percent to 11.5 percent, leaving 37.7 million people out of work, CEPAL said.

Extreme poverty is expected to surge from 11 percent to 13.5 percent, or 16 million people.

"G-20 leaders need to support multilateral organisations to lend at favourable interest rates to heavily indebted countries by postponing or canceling" the debt, said CEPAL's Executive Secretary Alicia Barcena, "otherwise it will be impossible to pay."

"Exceptional measures are required to deal with an unprecedented crisis. There will be no progress without international cooperation and solidarity."

– TIMES/AFP