LatAm, Caribbean economy to grow 5.9% in 2021: UN

SANTIAGO - The Latin American and Caribbean region will see economic growth of 5.9 percent in 2021 amid a pandemic that has exacerbated longstanding structural problems in the region, the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) has said.

In its report titled "Economic Survey of Latin America and the Caribbean 2021: Labor Dynamics and Employment Policies for a Sustainable and Inclusive Recovery Beyond the COVID-19 Crisis," the organization projected a slowdown for 2022, with an expansion of 2.9 percent.

The health crisis has contributed to inequality, low investment, the informal economy, unemployment and poverty in the region, ECLAC's Executive Secretary Alicia Barcena said Tuesday during a virtual presentation from the organization's headquarters in Chile's capital Santiago, calling for a recovery in investment and employment for sustainable, dynamic and inclusive growth.

This year's estimated growth is mainly due to a low base of comparison, after a 6.8-percent contraction in 2020, she said, in addition to the positive effects from external demand, the rise in prices of basic commodity exports from the region and an increase in aggregate demand.

Barcena noted that there are significant imbalances between developed and middle-income nations -- including most Latin American and Caribbean countries -- in areas such as COVID-19 vaccination campaigns and economic stimulus policies.

"To maintain expansionary fiscal and monetary policies, the countries of the region need to complement domestic resources with greater access to international liquidity and multilateral mechanisms, if necessary, to facilitate debt management," she said, urging developed countries to cooperate in this area.

The report showed that structural issues in the region have led to limited or stagnated economic growth for decades and will thus affect the resumption of activities.

In 2020, the region's labor markets experienced the greatest crisis since 1950, with a sharp drop in labor participation, especially of women, whose presence fell back almost two decades and will only advance to 2008 levels this year.

ECLAC proposed channeling investment into sectors that promote a new development style that boosts competitiveness and employment while reducing the region's ecological footprint.

This includes renewable energies, sustainable urban mobility, digital, the medical device manufacturing industry, bio-economy and ecosystem services, the care economy, the circular economy, and sustainable tourism.

"Boosting employment will require productive and labor policies to promote labor market integration, especially for women and young people," Barcena said.

She also called for expanding employment development programs and promoting sectoral policies to reactivate productive activities severely affected by the crisis, such as trade and tourism, extending and deepening support for small and medium-sized enterprises, and strengthening the care economy.

The report also stressed that fiscal policy should accelerate public investment, and encourage and attract private investment, with an emphasis on bolstering tax revenue and reducing tax evasion, which represents some $325 billion, equivalent to 6.1 percent of the region's gross domestic product.

Barcena emphasized the need to strengthen regional, sub-regional and national development banks, with the goal of increasing lending capacity and pandemic response, as well as establishing a multilateral sovereign debt restructuring mechanism.

She put forward the idea of mitigating the procyclicality of credit rating agencies and helping to make financial stability a global public good through the creation of a multilateral credit rating agency.