Covid-19 spawns `economic downturn of historic proportions’ for the Caribbean - 2021 UN WESP report

Latin America and the Caribbean have suffered what the UN World Economic Situation and Prospects Report (WESP) Report for 2021 has described as “an economic downturn of historic proportions” arising mostly out of the health crisis resulting from the onset of the novel coronavirus.

Pointing its finger unerringly at the onslaught of the single biggest global health crisis in generations, the report says that economic activities in the region had been flattened by “prolonged national lockdowns, weaker merchandise exports and a collapse in tourism,” circumstances which it says had undermined economic activities and which had come on the back of “several years of disappointing growth.”

In the ensuing economic mayhem, the WESP report says, real GDP in the region is estimated to have declined by 8% last year.

The impact of COVID-19 on jobs, according to the Report, had pushed an estimated 45 million people in the region into poverty “wiping out all progress made over the past 15 years,” whilst being responsible for “further setbacks to the achievement of the Sustainable Development Goals.”

Asserting that last year’s COVID19-driven economic onslaught on countries in the region had left several of them facing “political risks and the possibility of a debt crisis,” the report says that the present circumstance had come at a time when many countries in the region were already engaged in a struggle against severe economic difficulties. “Stagnant growth, weak investment and limited macroeconomic policy space made the region highly vulnerable to a global shock. National lockdowns and movement restrictions have led to massive unemployment and income losses, aggravating long-standing disparities,” the Report adds. If the overall picture painted by the WESP report was clearly a gloomy one, the region managed to salvage some credit for what it says were the “substantial stimulus packages which it said had been put in place by some countries in response to the pandemic.

“This support, along with monetary easing, a gradual lifting of restrictions and a pickup in global economic activity, has prompted a modest recovery starting in the second half of 2020,” the report informs.

Going forward, the Report says that regional growth for this year is forecast at 3.8% before moderating to 2.6% in 2022. “The recovery will likely remain fragile and uneven,” the report says, adding that a resurgence of the COVID-19-related infection rates could lead to renewed tightening of containment measures.

At the same time, several countries in the region face significant political risks and the possibility of a debt crisis.

The International Labour Organization’s Economic Commission for Latin America’s (ECLAC) estimates state that working hours reportedly dropped by about 21 per cent during the first nine months. “Job losses have been particularly severe in the informal sector, where most occupations are contact-intensive; and women, young people and workers with low education, who make up the bulk of employment in sectors such as retail and hospitality, were disproportionately affected. Countries where informal work is widespread and where governments implemented stringent and lengthy lockdowns have experienced the largest employment shocks,” the report adds.