During the presentation this Friday of the new report of the Economic commission for Latin America and the Caribbean (ECLAC), the executive secretary of the agency, Alicia Bárcena, pointed to the urgent need to put in place measures “to enable flatten the curve of spread of the disease from coronavirus, without flattening the curve of the economy“.
At the same time, he urged the regional Governments to take urgent measures to address the triple current emergency: the health, social and economic, and asked them to strengthen their development strategies, through the coordination and integration of subregional and regional levels to ensure “the supply chains of goods are critical, to promote a voluntary migration, not forced, to relieve the poverty and promote the reduction of inequality, among other measures.”
“Unlike 2008, this is not a financial crisis but a people, production, and welfare. A situation of economy of war is too important to leave to the market. The States are assuming a central role to suppress the virus and the risks that will affect the economy and social cohesion,” he said.
First of all, international collaboration
In this delicate stage, Barcena stressed the importance of international cooperation and stated that the overcoming of the crisis “will depend on the economic strength of each country, therefore, given the asymmetries between developed and developing countries, the role of the UN, the IMF and the World Bank will be essential to ensure access to finance, and sustain social spending and economic activity with innovative measures”.
Precisely to monitor and track the progress to the medium and long term in each country, ECLAC has created the Observatory COVID-19that will have updated information on the movements within and between countries, health, labour, economy and education.
Economic outlook gloomy
The ECLAC report points out that the effects of the crisis of the COVID-19 will cause a fall in GDP of at least a 1.8 percent and does not rule out that it may be between -3% and -4%, or even more.
He also notes that this instability will have direct economic effects on health systems, regional “whose infrastructure is insufficient to cope with the problems generated by the pandemic, and the rates of mortality, and that there will be indirect effects on the supply and demand economic.
Among the latter he pointed out five key aspects:
- The decrease of the economic activity of major trading partners and their effects.
- The fall in the prices of primary products.
- The disruption of global value chains.
- The lower demand for tourism services.
- The intensification of risk aversion and the worsening of global financial conditions.
Fall in exports
Another forecast significant is the value of the regional exports which are estimated to will decrease by at least 10.7% by the decline in prices and “the contraction in global aggregate demand”.
Also, you must take into account an additional factor that may exacerbate the inequalities between countries and income groups, and that has been accented with the spread of the virus: the use of the internet and digital technologies.
“The countries of the region have productive capacities unsophisticated and fragmented at the regional level, which requires climbing the national and regional capacities, mainly in the production and provision of goods of first need. To do this it is imperative to boost intra-regional trade“the report said.
Employment and poverty
The study indicates that, “given the economic and social inequalities of the region, the effects of unemployment will affect disproportionately the poor and the strata of vulnerable middle-income”.
In addition, it is suggested the possibility that the crisis will increase the informal employment, that it was 53,1% in 2016, and that the poorest families send their children to work, increasing child work rates and of low or zero schooling.
Solutions to emergencies
For the health emergency the ECLAC highlights that it is obligatory to “apply immediately and efficiently-containment measures suggested by the World Health organization (WHO), strengthening health systems and ensuring universal access to testing, medications, and cures.”
The emergency social demand “measures of income protection for the most vulnerable groups, measures of employment protection, such as unemployment benefits and basic income of emergency, and measures to support small and medium-sized enterprises (SMES) and own-account workers”.
In connection with the emergency economicconsiders necessary “actions of fiscal policy, monetary policy and international cooperation”.
ECLAC also called “to lift the sanctions imposed on Cuba and Venezuela“allowing their access to food, medical supplies, and tests of the COVID-19 and medical assistance. “It’s a time of solidarity, not exclusion,” the document says.