The Strategist

UN expects Latin American economy to slow down

09/01/2021 - 03:51

Economic growth in Latin America and the Caribbean will be 5.9 per cent in 2021, due to last year's weak performance, and is expected to slow to 2.9 per cent in 2022, the UN Economic Commission for Latin America and the Caribbean (ECLAC) said.

Ted McGrath via flickr
Ted McGrath via flickr
"Latin America and the Caribbean will grow in 2021, although the pandemic continues and the crisis has exacerbated long-standing structural problems in the region: low investment and productivity, informal employment, unemployment, inequality and poverty... ECLAC has updated its forecast for regional growth this year to 5.9% and warns that in 2022 the region will see growth slow down, presumably to 2.9%," the organisation said in a report.

The 2021 growth is attributed in the document to the low comparative level of 2020, when the region's economy contracted by 6.8%, the positive effects of external demand for local goods and higher prices for the region's main export products.

ECLAC suggested that countries in the region should invest in sectors that promote new forms of development, can increase competitiveness and employment and reduce environmental impacts.

These include the renewable energy transition, sustainable tourism and urban mobility, the digital revolution for universal access to technology, the health industry, the bioeconomy and ecosystem services, the care economy and the circular economy.

On the fiscal front, the region's states, according to the commission, should help accelerate public investment, encourage and attract private investment, raise tax revenues and fight tax evasion - ECLAC estimates that regional budgets are underpaid by $325 billion in taxes (6.1 per cent of regional GDP).