![]() ![]() And there were many additional costs, including education losses, excess deaths, and job and firm destruction, that were more pronounced for low- and middle-income households and countries (OECD 2020).įigure 3 Global GDP projections (constant USD, index 2017=100) Updating the methodology used in OMS (2021) to the latest growth revisions, a back-of-the-envelope estimate based on the IMF’s pre-Covid and latest projections shows that in Latin America the expected output loss – as measured by the present value of the difference between pre- and post-pandemic growth forecasts for 2020–30 – will be roughly 76% of 2019 GDP, or nearly 70% larger than the global one. While the global economy is already recovering – indeed at a faster pace than originally predicted (as Figure 3 illustrates, forecasts were revised upward, particularly for advanced countries) – the global rebound masks important cross-country differences. Conversations with 16 Latin American Economists here. Note: AE = Advance economies EM Asia= emerging and developing Asia excluding China EM Europe = Emerging and developing Europe LAC = Latin America and the Caribbean MECA = Middle East and Central Asia SSA = sub-Saharan Africa.Īgainst this backdrop, a new CEPR eBook collects a series of conversations with distinguished Latin American researchers and policymakers aimed at trying to map a possible future for Latin America (Goldfajn and Levy Yeyati 2021).ĭownload Latin America: The Post-Pandemic Decade. Source: Levy Yeyati and Filippini (2021c), based on IMF-WEO Oct-2021. ![]() Not surprisingly, societies face growing indifference with political regimes (Latinobarómetro 2021), and social outbursts in several countries, such as Chile or Colombia, reveal dissatisfaction which will likely limit economic policy looking forward.įigure 1 Global and Latin American growth from a historical perspective This explains the region worse performance during the pandemic: larger welfare costs and meagre relative recovery. The pandemic also flagged two long-standing but often overlooked regional deficits: poor state capacity, and labour exclusion and informality. As a result, the downturn was more pronounced (Figure 2) and long-run damages – for example, those associated with education losses or job destruction – will likely be larger and more persistent. It hit the region after years of mostly lacklustre growth compared with global averages (Figure 1), and at a time when the gains in terms of poverty and inequality had been tapering off and governments were finding social expectations increasingly harder to meet. 2020, IMF 2020, Simola 2021).įor Latin America, the Covid-19 pandemic came at an inconvenient time and on top of chronic problems. The Covid-19 shock could be interpreted as a combination of supply and demand shocks, with the supply shock driven by the restriction of activities due to lockdowns and distancing measures to contain the spread of the virus, and the demand shock reflecting both the income effect suffered by workers in restricted activities, as well as the diminished mobility and changes in consumption patterns due to contagion concerns (Guerrieri et al. While uncertain and dependent on the policy response, experts have pointed to the possibility of permanent output losses since the beginning (Baldwin and Weder di Mauro 2020), with a more deleterious impact on developing economies (Djankov and Panizza 2020, Levy Yeyati and Filippini 2021). In April 2019, the IMF revised global growth down by 6.3% relative to its March (pre-Covid) forecasts. ![]()
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