Latin America and the Caribbean: summary of the year 2021

After a difficult 2020, Latin America and the Caribbean have grown again this year. Although the region still has a long way to go in terms of vaccine deployment, the pandemic has prompted a series of changes that will have a positive impact on the region in the medium and long term, including increased digitization and a more focused approach. focused on sustainability.

This year has been characterized by an economic recovery, and the IMF forecasts that the region will have experienced growth of 6.3% in 2021. This figure is higher than the world average of 5.9%, as well as that of the G7 countries, which stands at 5.3%.

Regarding individual growth figures, among the main economies in the region the first are Chile (11%) and Peru (10%), followed by Colombia (7.6%) and Argentina (7.5%). Mexico, for its part, is expected to grow 6.2%, Brazil 5.2% and Bolivia 5%, while Venezuela’s economy will contract 5%.

Despite these figures, the economic impact of the pandemic continues to be felt throughout Latin America. GDP per capita is not expected to return to pre-crisis levels until 2023-24, while poverty and extreme poverty are at their highest levels in the past 12 and 20 years, respectively. Furthermore, in the region, as in the rest of the world, the impact that the Omicron variant will have remains to be seen.

In terms of vaccination figures, the deployment of vaccines has in many respects reflected the different divisions, inequalities, and stages of development in Latin America.

At one end of the scale is Chile, which in April this year was among the top 10 countries in the world in terms of per capita vaccination, along with other world leaders such as Israel, the United Kingdom and the United Arab Emirates.

Being a richer country, Chile was able to achieve this through more advanced logistics and health infrastructure.

At the end of the year, the country with the highest vaccination rate was Cuba, with 255.29 doses per 100 people. At the other end of the scale was Haiti, with 1.6 doses per 100 people.

The pandemic has also brought to light a number of structural problems, among them the general lack of adequate social coverage networks and the prevalence of informal employment.

Yet many countries are taking the pandemic as an impetus to make far-reaching changes, for example by working to increase digitization, or by putting sustainability at the center of policy-making. In this sense, Many initiatives were launched or expanded in 2021 that will have a lasting impact on the region’s economy.

Digitization

As in many emerging regions, One positive outcome of the pandemic was the expansion of digitization.

In 2020 this materialized into an explosion of e-commerce and online payments, making the region one of the fastest growing e-commerce markets in the world. This trend has been consolidated in 2021 and is paving the way for an expansion of digital technologies in all areas.

In Mexico, for example, this process was observed in various sectors, especially energy and banking; This is expected to help the country both to address structural vulnerabilities and to reap the benefits of new global economic trends.

A significant advance in this regard was Microsoft’s announcement in February that it was going to invest $ 1 billion in Mexico for the 2021-25 period. These funds will be used to establish cloud data center clusters to improve access to digital technologies. The plan also focuses on education and training, with the creation of three laboratories in collaboration with public universities.

Digitization is also helping the unbanked segment of Mexico – which represents around 63% of the population – access formal banking. A key challenge is building trust in digital payments; In this sense, cybersecurity has become a growing industry in the country.

Similarly, Peru has made important advances in bankarization with the help of digital technologies, and at the same time there has been a substantial increase in the use of contactless payments due to social détente norms and concerns related to health.

Another regional pioneer in the field of digitization and substitution of cash is Trinidad and Tobago, where in 2021 the Ministry of Digital Transformation, the Technology Investment Fund and a Technology Promotion and Development Company were created.

The Fourth Industrial Revolution

Digitization is part of a broader social and technological change that is often referred to as the Fourth Industrial Revolution (4IR).

Different technologies associated with the 4IR are gaining ground in Latin America.

For example, with an estimated 113 million people living in substandard housing across the region, 3D printing low-cost houses – a process that uses a mix of concrete, water and other materials to build a house for as little as $ 4,000 – is increasingly seen as a viable option to tackle the housing shortage.

Pilot projects using this method have been launched in El Salvador to build affordable housing for low-income families who have lost their homes due to natural disasters., while in Mexico a completely new neighborhood is being built for 50 low-income families using the 3D printing method.

Agriculture is another sector that increasingly benefits from the integration of 4IR techniques and technologies.

These tend to focus on harnessing innovation to increase performance and resilience in national and regional supply chains, with a focus on practices that are adapted to local agroecological contexts.

In Guatemala, for example, the project ‘Responding to COVID-19: Modern and Resilient Agri-Food Value Chains’, funded by the World Bank and launched earlier this year, is an agribusiness strategy that aims to reduce food losses and increase the adoption of climate-resistant technologies.

Sustainability and circular economy

Another result of the COVID-19 pandemic has been the acceleration of a shift towards what is known as the circular economy.

As a counterpoint to the linear ‘take, make and throw away’ model, the circular economy denotes an economic system in which products and materials are kept in circulation for as long as possible. By designing things to be as durable, reusable and recyclable as possible, the model places great importance on efficiency and ecological sustainability, and relies on a shift towards renewable energy sources.

As Latin America continues its economic recovery after the outbreak of COVID-19, countries in the region increasingly look to the circular economy as a platform for future sustainable growth.

An important step in this direction was taken in February of this year with the launch of the Regional Circular Economy Coalition, an initiative for all of Latin America and the Caribbean led by the United Nations Environment Program, whose objective is to increase access to financing for sustainable projects.

Elsewhere, circular economy solutions can also play a role in ensuring other day-to-day needs, such as drinking water and sanitation.

For example, at the Atotonilco wastewater treatment plant in Mexico, treated water is used to irrigate some 90,000 hectares of agricultural land in the Mezquital Valley, while the sludge derived from the process is reused to produce electricity and energy. thermal, and biosolid by-products are used to improve the soil in forests and agriculture.

With regard to sustainability, universities in the region are playing a leading role in driving and inspiring change.

For example, the National Autonomous University of Mexico (UNAM) inaugurated in 2018 a University Coordination for Sustainability, whose objective is to make sustainability a central element of the identity of UNAM, establishing it as a national and international point of reference in the matter.

For its part, the University of São Paulo (USP) -the main university in Brazil- has implemented a series of measures to reduce its carbon footprint, including reducing the use of official vehicles and virtual thesis defenses. USP has also recently instituted an Interdisciplinary Center for Climate Research, which brings together researchers from different subject areas.

In fact, in Latin America in general there is a growing awareness of the importance of education on climate change. In March of this year, the Argentine government approved a law ordering the application of a national environmental education strategy at all levels.

If this momentum is sustained, and if it is accompanied by significant progress towards decarbonisation, then 2021 could mark a milestone in Latin America’s transition towards true sustainability.

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