LatAm, Caribbean is 'new COVID-19 epicenter'
June 29, 2020 |
Government actions have relieved pressure, but high informality and low preparedness are hindering the region's response, IMF says
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Latin America and the Caribbean region has become the "new COVID-19 global epicenter" as the rate of infections and deaths narrows the gap with Europe and the United States, said Alejandro Werner, head of the Western Hemisphere department at the International Monetary Fund (IMF).
"The pandemic's still rapid spread indicates that social distancing measures will need to remain in place for a longer time, depressing economic activity in the second half of 2020 and leaving more scarring going forward," Werner wrote in a blog note released just ahead of a Friday press conference.
High levels of informality and low preparedness are hampering efforts to flatten the curve, despite actions taken by central banks in the region in recent weeks that have helped ease financial conditions and support financial growth, Werner later said in remarks to the press.
"Countries should be very careful indeed as they consider reopening their economies and should allow evidence-based data and science to guide the process," he said.
Economies in Latin America and the Caribbean are expected to shrink 9.4% in 2020, driven by deep recessions in its two largest economies, Brazil and Mexico, the IMF stated in its World Economic Outlook Update released on June 24.
Several Latin American nations have also made use of emergency financing provided by the IMF. Since the start of the pandemic, the multilateral lender has provided 70 emergency loans totaling $25 billion of which 17, representing $5.2 billion, were provided to countries in the region, said Werner.
Flexible credit lines were also provided to Chile and Peru and renewed for Colombia that together with Mexico amounted to $107 billion in available credit for those four countries alone, he said.