Levels of Internal Product Stupid per capita in Latin America and the Caribbean will not return to pre-pandemic levels until 2023 or 2024, according to a new report prepared by several international organizations.
This document advises that poverty and extreme poverty have reached levels in the region not observed in the last 12 and 20 years, respectively. So reported Euro Press.
The text prepared jointly by the OECD, ECLAC, the European Union and the Development Bank of Latin America (CAF) warns that the crisis derived from the pandemic has caused damage to an “extremely vulnerable social fabric, resulting in a significant increase in poverty and inequality. “
All this taking into account that demand policies promoted by governments served to avoid loss of life and increases in poverty. Without these transfers, the Gini index – a measure of inequality – would have increased by 5.6% compared to 2019, instead of the 2.9% registered.
Much of this inequality is explained by the strong presence of labor informality in the region. When the pandemic broke out in Latin America, 50% of workers had a job that had social security or was not recognized in formal employment records.
Households that earn their income exclusively from the informal economy have been the hardest hit by the crisis, as they have lost their jobs and the income they earned from them. On average, 45% of the Latin American population lives in households that depend on this type of employment, 22% live in mixed households and 33% live in households that depend on the formal economy.
Likewise, the phenomenon of informality affects the economies of the region asymmetrically, since while Chile or Uruguay have less than an impact of less than 20%, in Bolivia, Honduras or Nicaragua it exceeds 60%.
In this context, the organizations recommend that Latin American economies promote innovative options for labor formalization and reduce social coverage gaps to protect women, youth, migrants and other vulnerable groups.
No solution to guarantee a solid recovery
The agencies warn that there is no approach or solution that guarantees a solid, sustainable and inclusive recovery. However, a common feature for recovery is the need to adopt a clearly defined sequence of fiscal policy measures in spending, taxation, and public debt management.
Mobilizing resources for recovery will require efforts at the national level and better cooperation and coordination at the international level, especially with regard to public debt.
At the national level, the document advises that Latin American governments use fiscal, social and productive transformation policies to build a new social contract. In particular, the elements of intra- and intergenerational mobility and equity must be duly considered., as well as the challenges associated with climate change and the transition towards a low-carbon development model.
In regional matters, the report emphasizes that Latin America lags behind in terms of integration, since only 14% of its exports remained within the region in 2019, and the proportion has been declining steadily since 2014.
Thus, the promotion of intra-regional trade, the creation of regional value chains and the improvement of the region’s participation in global value chains, through the connection of micro, small and medium enterprises with international trade are key public policy objectives in the context of the coronavirus.
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Levels of Internal Product Stupid per capita in Latin America and the Caribbean will not return to pre-pandemic levels until 2023 or 2024, according to a new report prepared by several international organizations.
This document advises that poverty and extreme poverty have reached levels in the region not observed in the last 12 and 20 years, respectively. So reported Euro Press.
The text prepared jointly by the OECD, ECLAC, the European Union and the Development Bank of Latin America (CAF) warns that the crisis derived from the pandemic has caused damage to an “extremely vulnerable social fabric, resulting in a significant increase in poverty and inequality. “
All this taking into account that demand policies promoted by governments served to avoid loss of life and increases in poverty. Without these transfers, the Gini index – a measure of inequality – would have increased by 5.6% compared to 2019, instead of the 2.9% registered.
Much of this inequality is explained by the strong presence of labor informality in the region. When the pandemic broke out in Latin America, 50% of workers had a job that had social security or was not recognized in formal employment records.
Households that earn their income exclusively from the informal economy have been the hardest hit by the crisis, as they have lost their jobs and the income they earned from them. On average, 45% of the Latin American population lives in households that depend on this type of employment, 22% live in mixed households and 33% live in households that depend on the formal economy.
Likewise, the phenomenon of informality affects the economies of the region asymmetrically, since while Chile or Uruguay have less than an impact of less than 20%, in Bolivia, Honduras or Nicaragua it exceeds 60%.
In this context, the organizations recommend that Latin American economies promote innovative options for labor formalization and reduce social coverage gaps to protect women, youth, migrants and other vulnerable groups.
No solution to guarantee a solid recovery
The agencies warn that there is no approach or solution that guarantees a solid, sustainable and inclusive recovery. However, a common feature for recovery is the need to adopt a clearly defined sequence of fiscal policy measures in spending, taxation, and public debt management.
Mobilizing resources for recovery will require efforts at the national level and better cooperation and coordination at the international level, especially with regard to public debt.
At the national level, the document advises that Latin American governments use fiscal, social and productive transformation policies to build a new social contract. In particular, the elements of intra- and intergenerational mobility and equity must be duly considered., as well as the challenges associated with climate change and the transition towards a low-carbon development model.
In regional matters, the report emphasizes that Latin America lags behind in terms of integration, since only 14% of its exports remained within the region in 2019, and the proportion has been declining steadily since 2014.
Thus, the promotion of intra-regional trade, the creation of regional value chains and the improvement of the region’s participation in global value chains, through the connection of micro, small and medium enterprises with international trade are key public policy objectives in the context of the coronavirus.
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