(Bogota) The Inter-American Development Bank (IDB) predicted on Saturday that the economic recovery in Latin America and the Caribbean will be difficult after the disaster caused by the epidemic.
“The region will emerge from the crisis with greater debt, more poverty and growing income inequalities,” the multilateral organization, which has met since Wednesday in Colombia, said at its annual meeting.
The “shock” resulting from massive unemployment will also lead to an increase in extreme poverty, which will decline from 12.1% to 14.6%, a deterioration that will be particularly affected by countries that depend on tourism and the export of raw materials.
But the Islamic Development Bank warns that the future of the region will largely depend on reforms undertaken by governments to alleviate the health emergency.
With only 8% of the world’s population, Latin America and the Caribbean account for around 25% of all coronavirus deaths (733,000).
After a historic decline of 7.4% in regional GDP last year, the Islamic Development Bank expects 4.1% economic growth for 2021, followed by 2.5% in subsequent years, based on “growth potential”. ‘Immunization’ of countries provided there are no new restrictions imposed.
It also sees a negative scenario, based on slowing economic growth in the US and Europe, the emergence of new variants and slow vaccination, which “will slow down growth”.
To avoid this disastrous scenario, the Islamic Development Bank urged countries to undertake urgent fiscal reforms, as well as measures that boost productivity, regional value chains, the digital economy and inclusive job creation, without sacrificing the goal of slowing down climate change that threatens the region in particular. .
In order to stimulate the recovery, the Islamic Development Bank will need new resources, its president, Mauricio Claver Caroni, said Saturday.
“The current resources are simply not sufficient.” He added that “recapitalization should be considered” so that the Islamic Development Bank can play its role in reviving the region without specifying the required amount.