Growth in Latin America and the Caribbean will slow to 2.1 percent in 2022 after averaging 6.2 percent last year, according to new ECLAC forecasts. This slowdown comes against a backdrop of severe asymmetries in the ability of developed, emerging and developing countries to implement fiscal, social, monetary, health and vaccination policies for a sustainable recovery from the Covid-19-induced crisis under.
Latin America and the Caribbean is facing a very complex 2022: uncertainty over the ongoing evolution of the Covid-19 pandemic, sharp deceleration in growth, continued subdued investment and productivity and a sluggish employment recovery, persistent social impacts from the crisis, reduced fiscal space, Rising inflationary pressures and fiscal imbalances.
“The projected economic slowdown in Latin America and the Caribbean in 2022, coupled with low investment and productivity, poverty and insecurity,” said Alicia Bárcena, executive secretary of ECLAC, at the report’s launch in Mexico City today. Issues such as equality require growth and job creation to be a core element of public policy making, while addressing inflationary pressures.”
Economic growth slows sharply
The region experienced higher-than-expected growth in 2021, averaging 6.2%, due to the low baseline established in 2020, greater liquidity and a favorable external environment.
This year’s average growth rate of 2.1% reflects large differences between countries and subregions: the Caribbean will grow by 6.1% (excluding Guyana), Central America by 4.5% and South America by 1.4%.
Stimulate growth and curb inflation
Worldwide, advanced economies are forecast to grow by 4.2% in 2022, the only one to return to their pre-pandemic growth trajectory this year. Emerging economies are expected to grow by 5.1% in 2022, but they will only return to their pre-pandemic growth trajectory forecasts in 2025.
Eleven countries in Latin America and the Caribbean successfully returned to pre-crisis levels of GDP growth in 2021, and by 2022, three more countries will join them, accounting for 14 of the 33 countries in the region.
ECLAC pointed out that for monetary and fiscal policy, it is crucial to give priority to stimulating growth and curbing inflation.
Labour market and gender equality
On the labor market, employment recovered more slowly than economic activity last year: 30% of jobs lost in 2020 will not be recovered by 2021.
Rising inequality between men and women reflects a greater burden of care by women and a lack of dynamism in sectors such as the services sector, where women are employed. ECLAC expects the female unemployment rate to be 11.5% in 2022 – slightly down from 11.8% in 2021, but still well above the pre-pandemic level of 9.5% in 2019; while the male unemployment rate is forecast to be 8.0% this year, almost the same as The 8.1% in 2021 is the same and still well above the 6.8% in 2019.
Product and service prices rise
The report also touches on one of the most worrisome economic issues today, both regionally and globally: rising prices for products and services. In 2021, inflationary pressures (inflation averaged 7.1% through November, excluding Argentina, Haiti, Suriname and Venezuela), led by higher food and energy prices, are expected in Latin America and the Caribbean countries, and these pressures are expected to continue in 2022. year lasts. In addition, energy and food prices in international markets, as well as the evolution of exchange rates, will be key in determining future price dynamics.
reform tax
ECLAC also stressed that it is crucial for countries in the region to increase tax collection levels and improve tax structures to enable fiscal sustainability to meet growing spending needs. In addition, tax evasion must be eliminated ($325 billion in total, or 6.1% of regional GDP), combined personal and corporate income taxes, expanded asset and property taxes, established levies on the digital economy, environmental taxes, and other taxes related to public health issues, And gradually revise and update royalties for the development of non-renewable resources.