The Caribbean and Latin America are forecast to experience slightly higher combined economic growth than the world average of 5.3 per cent this year, the United Nations Conference on Trade and Development (UNCTAD) has predicted.
In its Trade and Development Report 2021, titled From Recovery to Resilience: The Development Dimension, UNCTAD said the wider region’s economy should grow around 5.5 per cent this year but slowdown to a 2.6 per cent growth rate in 2022.
UNCTAD said: “The Latin American and the Caribbean region was severely hit by COVID-19, with high contagion and mortality rates, together with a sharp economic downturn. The gross domestic product of the whole region fell 7.1 per cent in 2020 and is expected to grow just 5.5 per cent in 2021.”
The UN intergovernmental organization did not provide a break down for the Caribbean region. But in its regional trends assessment it pointed out that “the reduction in tourism and remittances from the United States pushed Central America (excluding Mexico) and the Caribbean into a deep recession in 2020, with double-digit gross domestic contractions in many island economies”.
“In contrast, assuming vaccination accelerates and most of the restrictions on international travel come down, the region [should] recover fast by the end of 2021 and return to its pre-pandemic 3.0 per cent growth trend in 2022,” it said.
UNCTAD warned that renewed international support was needed for developing economies as they continued to have limited access to vaccines, battle fast spreading new COVID-19 variants and struggle with a growing debt burden.
Stating that developing countries were facing “the prospects of a lost decade”, the report said it should “prompt us to rethink – or, perhaps, revive – the role that fiscal policy can play, beyond the countercyclical interventions of late”.
But in a warning against fixating on inflation, the UNCTAD report said: “Delivering the necessary support will also require the kind of systemic reforms to the international economic architecture that were promised after the global financial crisis but were quickly abandoned in the face of resistance from the winners of hyperglobalization.
“And amid all these efforts, policymakers will need to stay wary of inflation scaremongering that would derail progress before it has really taken off.”
The report described this year’s projected global growth as “a strong recovery”, though pointing out that it was coming against the background of “a good deal of uncertainty clouding the details at the regional and country levels over the second half of the year”.
Like other developing countries and tourism-dependent economies, Barbados continues to battle high debt, high unemployment and low economic activity, even as the spread of the COVID-19 continues to create a challenge.
The UNCTAD report said there was no denying that programmes to protect the incomes of households, especially of those who were out of work, were necessary during the pandemic, especially for wage-earners in the lower income brackets and those who “live from pay cheque to pay cheque” in both developed and developing countries.
“In the latter case, moreover, where a large proportion of workers are involved in informal sectors and activities relying on personal contact, such transfers represent the only effective livelihood support tool,” it said. “Other forms of financial support via existing welfare or unemployment benefits programmes are out of reach for the majority of households in developing economies.”
(marlonmadden@barbadostoday.bb)
