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The strategies of the countries of South America have been diverse to face the economic consequences of the coronavirus. However, beyond the efforts – and amid much criticism – the result seems to be the same: historic falls in the Gross Domestic Product.
According to the report “Economic Outlook for Latin America 2020” presented a few weeks ago by the Organization for Economic Cooperation and Development (OECD) and the Economic Commission for Latin America and the Caribbean (ECLAC), the pandemic that has already taken The life of 1.12 million in the world “will have important and lasting socio-economic consequences in Latin America and the Caribbean, which will aggravate the already complex situation in the region.”
Worse still, he estimates that poverty in Latin America may increase by 45.4 million people to a total of 230.9 million. This is equivalent to about 37.3% of the population of Latin America and the Caribbean.
In this context, the International Monetary Fund (IMF) anticipates a drop of 8.1% for this group of nations, after 2019 in which GDP registered a 0.2% drop. This means that it will be the region hardest hit by the impact of the pandemic.
Cepal, for its part, estimated that the countries of this part of the world will suffer a contraction of 9.4%.
Chile’s GDP experienced a record contraction of 14.1% in the April-June quarter of 2020, which represents the largest drop in activity since the 1982 crisis. Furthermore, the latest Monthly Index of Economic Activity for August showed a a drop of 11.3%, much worse than the experts estimated.
Faced with this scenario, the IMF projects a 6% drop for the country for the local GDP in 2020. In this same indicator, ECLAC forecasts a 7.9% decrease and the World Bank (WB) of -6.3%.
In this context, the possibility that Chile would be the first country in Latin America to exceed US $ 30,000 in 2022, as the IMF itself anticipated years ago, as well as the dream of reaching the European level, seem increasingly distant.
According to the Fund, Chile reached a maximum of US $ 25,057 last year (measured at purchase parity in current dollars), a level that could only recover in 2022. By 2020 it is expected to reach US $ 23,455, which implies a fall of US $ 1,602 compared to last year and, in addition, it is its lowest level since 2016.
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IMF improves Chile’s projection by more than one point and estimates a 6% contraction for 2020
Argentina, which faced the pandemic with strict containment measures from the beginning, deepened the deterioration of its economy with an unprecedented fall of 19.1% in the second quarter. For the neighboring country, the IMF estimates a contraction of 11.8%, ECLAC -10.5% and the World Bank -12.3%.
Peru, one of the main copper exporters together with Chile, during the second quarter experienced a real growth setback, registering a fall in GDP of 30.2%. However, the IMF anticipates a contraction of the economy of 13.9%. Cepal, for its part, foresees a 13% contraction and the World Bank a -12%.
Bolivia, which this week saw the victory of the Movement Toward Socialism (MAS) in the presidential and parliamentary elections, presented a drop of 21.68% during the second quarter, according to the INE of the plurinational state. For this traumatic 2020, the IMF calculates a contraction of 7.9%, more severe than the -7.3% of the World Bank and -5.2% of the ECLAC.
The World Bank considers “very limited” opportunities for the industry in Latin America
Brazil, which has been shown to be one of the countries most reluctant to promote measures to confront the coronavirus, recorded a contraction of its GDP of 11.47%, one of the largest in its history. Thus, the IMF projects a 5.2% fall for 2020, ECLAC -9.2% and the World Bank -5.4%.
While Paraguay, considered by Bloomberg the “economic winner of the region”, registered a drop of 6.5% in its GDP during the second semester. The good position that the Guarani enjoy, in relation to their peers, is due to the good results of agriculture and construction, according to the news agency. Given this scenario, the IMF projects a drop of 4%, ECLAC a contraction of 2.3% and the BC -3.2%.
For its part, the GDP of Uruguay, one of the countries that has stood out for the results of its health strategy, fell 10.6% in the second quarter of the year. Despite their actions against Covid-19, the Charruas have forecast a 4.5% drop by the IMF, ECLAC a -5.2% and the World Bank of -4% for 2020.
Ecuador, severely affected by Covid 19 in the first stage, reported a 12.4% year-on-year contraction in the second quarter, the largest quarterly drop in 20 years, according to the Central Bank of Ecuador. Along these lines, the IMF projects a contraction of 11% for Ecuadorians, ECLAC 9% and the BC -11%.
Colombia had a contraction of 15.7% during the second quarter and thus a GDP for 2020 of -8.2% is projected by the IMF, while ECLAC estimates a fall of 5.6% and the World Bank a decrease of 7.2%.
Finally, Venezuela, which dragged a severe economic crisis long before the pandemic, during the last quarter it fell 32.8% in the second quarter of 2020. The Bolivarian Republic is expected to once again register the worst performance in the area. The IMF estimates a decrease of 25% and ECLAC 26%. The World Bank in its last publication of its projections for the region did not include this nation.
