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A senior official at the International Monetary Fund says the global economic outlook may be even worse than the bleak forecast announced by the organization last month.
“Our scenario is likely to fall a little short,” Alejandro Werner, IMF director for the Western Hemisphere, said in an interview with Voice of America.
The IMF in April predicted a 3% contraction in the world economy this year, according to projections that the coronavirus health crisis would ease in the second half of the year. For Latin America, it had forecast a contraction of 5.2%.
But as more countries open up and the pandemic shows little sign of slowing down, Werner said: “We are estimating in a baseline scenario that it could double minus 3 percent, and in Latin America we could see a contraction that is closer to 8 % “.
Werner said it is “an illusion” for governments to think that they can avoid blockades and other strict measures, such as in Nicaragua, where the government had decided against any type of quarantine and will continue with all economic activities.
The IMF official also expressed concern about Venezuela, which was embroiled in an economic crisis that forced massive emigration even before the pandemic.
“The case of Venezuela is not a ‘lost decade’. It is a decade of gigantic investment. What happened in Venezuela is a macroeconomic and social disaster that we have never seen in the region,” said Werner.
If there is a new spike in emigration due to the pandemic, he said, that could worsen the health and economic vulnerability of neighboring countries that host Venezuelans.
“But even in the absence of the pandemic, the fact is that 25% of the population has left the country and that represents a great challenge, especially in a context of slower economic growth and less job creation,” he added.
The economist emphasized that “conditions have not changed” for the IMF to approve emergency loans to the disputed government of Venezuelan President Nicolás Maduro.
The Maduro government has asked the IMF for $ 5 billion to help it tackle the pandemic. The request was rejected because the Maduro government lacks international recognition.
To date, the IMF has provided more than $ 3.4 billion in emergency loans to 19 governments in the western hemisphere.
