Latam, Caribbean economies to remain in COVID grip -IMF
Next year’s rebound from a sharp, 8.1% contraction in Latin American and Caribbean economies in 2020 will be partial and uneven, with output not catching up for years and tourism-dependent countries seen struggling the most, the International Monetary Fund wrote in a report published on Thursday.
Regional growth is forecast at just 3.6% next year and most countries aren’t seen returning to pre-COVID gross domestic product levels until 2023, the IMF wrote.
“The strong recovery in remittances and exports, together with low oil prices, will contribute to a milder contraction in Central America, Panama, and the Dominican Republic, while tourism-dependent Caribbean countries will experience more severe recessions,” according to the IMF.
About 45% of the region’s jobs are in so-called contact-intensive sectors like hospitality, compared with just 30% across emerging markets globally, leaving the region at a disadvantage amid the global fight against COVID-19. On the other hand, about 20% of jobs can be done remotely, lower than the 26% EM average and about half of those in developed countries.
The region has also faced a higher human cost, with about 28% of COVID-19 cases and 34% of worldwide deaths to last month, despite being home to just 8.2% of the global population.
Among the largest Latin American economies, Peru is seen contracting the most this year with a -13.9% GDP growth estimate while its 7.3% expansion forecast for 2021 is the largest.
Among Caribbean economies, those dependent on tourism are seen contracting almost 10% this year with a 4% pickup in 2021, while commodity exporters are projected to grow 0.6% in 2020 and 3.8% next year, the report said.
IMF REGIONAL Real GDP Growth GROWTH PROJECTIONS Pct y/y (est.) 2020 2021 North America -4.9 3.3 Mexico -9.0 3.5 United States -4.3 3.1 South America -8.1 3.6 Argentina -11.8 4.9 Bolivia -7.9 5.6 Brazil -5.8 2.8 Chile -6.0 4.5 Colombia -8.2 4.0 Ecuador -11.0 4.8 Peru -13.9 7.3 Caribbean (tourism) -9.9 4.0 Caribbean (commodities) 0.6 3.8
Source: Reuters (Reporting by Rodrigo Campos)