LatAm, Caribbean recession to be twice global average

LatAm, Caribbean recession to be twice global average

Economy & Policy Brazil Mexico Latin America

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Latin America and the Caribbean will see economic growth rates contract at almost twice the global average as sharp falls in economic output in Brazil and Mexico drag down the regional average this year, according to the latest data from the International Monetary Fund (IMF).

Brazil will see its economy contract by 9.1% and Mexico will see economic activity decline by 10.5% this year against a predicted 4.9% contraction in global growth in 2020, the multilateral said on Wednesday in its World Economic Outlook Update for June.

“The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast,” the IMF said.

Latin America and the Caribbean will be the worst performing region among Emerging Market and Developing Economies and second only to the Euro Zone with a 10.2% contraction expected this year, the report stated.

The IMF predicts Latin America and the Caribbean will return to growth in 2021 with a 3.7% expansion, but still lag the expected 5.4% average global rebound.

Global GDP in 2021 is expected to be 6.5% lower overall compared to pre-COVID-19 projections at the start of the year in 2021, the report said.

“The adverse impact on low-income households is particularly acute, imperiling the significant progress made in reducing extreme poverty in the world since the 1990s,” the report added.