Latin America and the Caribbean Will Grow 5.9% in 2021
Updated: Dec 29, 2022
Latin America and the Caribbean Will Grow 5.9% in 2021, Reflecting a Statistical Carry-over Effect that Will Moderate to 2.9% in 2022.
Latin America and the Caribbean will grow in 2021, although the pandemic remains present and the crisis worsened the region’s long-standing structural problems: low investment and productivity, labor informality, unemployment, inequality, and poverty. That is why recuperating investment and employment, especially in environmentally sustainable sectors, is key to a transformative and inclusive recovery, the Economic Commission for Latin America and the Caribbean (ECLAC) indicated today upon presenting a new edition of one of its most important annual reports.
The organization’s Executive Secretary, Alicia Bárcena, unveiled the Economic Survey of Latin America and the Caribbean 2021: Labour dynamics and employment policies for sustainable and inclusive recovery beyond the COVID-19 crisis, in which ECLAC updated its regional growth projection for this year to 5.9% and warned that the region will experience a deceleration in 2022, with an estimated expansion of 2.9%.
Growth in 2021 is mainly attributable to the low basis of comparison – after the 6.8% contraction recorded in 2020 – along with the positive effects arising from external demand and the rise in the price of the commodities that the region exports, as well as to increases in aggregate demand.
The annual report shows that the structural problems that have limited the region’s economic growth for decades were exacerbated by the pandemic and will limit the recovery in economic activity. Before COVID-19, the region was already on a path towards stagnation: in the six-year period between 2014 and 2019, it grew at an average rate of 0.3%, below the average of the six-year period that includes the First World War (0.9%) and the Great Depression (1.3%).
In addition, it has seen a steady decline in investment, reaching one of its lowest levels in the last three decades in 2020 (17.9% of GDP). Similarly, labor productivity is falling significantly.
Furthermore, in 2020, the pandemic sparked the biggest crisis that Latin America and the Caribbean’s labor markets have experienced since 1950. On a global level, the region’s labor markets were the most affected by the crisis prompted by COVID-19 – with the number of employed persons falling by 9.0% in 2020 – and the recovery expected for 2021 will not be enough to attain pre-crisis levels.
The pandemic also led to a sharp decline in labor participation, particularly among women. With the crisis, female participation reached 46.9% in 2020, which represents a setback to levels seen in 2002. In 2021, this indicator is expected to recover, reaching an estimated 49.1%, but that would still only be similar to 2008 levels.
2015 - GDP contractions in Latin America
Latin America is projected to suffer a negative growth of –0.3% in 2015 and resume marginal growth of 0.7% in 2016, according to the 5 October 2015 estimates of ECLAC, the UN Economic Commission for Latin America, and the Caribbean.
Among the main factors behind the growth, the drop is a weak internal demand; a global environment marked by low growth of the developed world; an important deceleration in emerging economies, especially China; the strengthening of the dollar, and growing volatility in financial markets; and an important fall in primary goods prices.
South America is expected to contract by –1.6% while Mexico and Central America would grow by 2.6%.
Brazil's GDP is projected to contract by 2.8% and that of Venezuela by 6.7%. Both countries are likely to continue the negative growth in 2016 too with Brazil shrinking by –1% and Venezuela by –7%.
Mexico's growth projection for 2015 is 2.2%, Argentina's 1.6%, Colombia's 2.9%, Peru's 2.7%, and Chile's 2.1%.
Panama will have the highest growth at 5.8%, followed by the Dominican Republic at 5.6% and Bolivia at 4.4%