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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)

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