Latin American economies will suffer a sharper-than-expected contraction this year due to the coronavirus pandemic, the International Monetary Fund (IMF) said on Wednesday (24.06.2020), as the region faces high infection rates that hamper recovery.
In his report June Global Economic Outlook, The IMF cut its estimate for the region's GDP growth to a decline of 9,4% in 2020, compared to the 4,2% drop estimated in April, as the effects of COVID-19 have been deeper than expected in the first quarter.
The new projections showed more adverse scenarios for the main Latin American economies. Mexico, heavily influenced by its ties to the United States, will see its economy contract by 10,5% this year, the IMF said, a sharp reduction from the expected 3,9% drop in April.
While Brazil, the epicenter of the epidemic in South America and with the second-highest number of cases in the world, will see its GDP fall by 9,1% in 2020, compared with the previous projection of a 3,8% decline, the Washington-based organization said.
Early data for the second quarter suggest sharper-than-expected contractions and the pandemic is still spreading among populations in the Americas, the IMF noted, so restrictive measures will continue to deteriorate the economic outlook in the region.
"In economies still struggling to control infection rates, the need to continue quarantines and social distancing measures will impact activity more," the report said.
The IMF highlighted that Brazil's economy will rebound by 3,6% in 2021 and Mexico's by 3,3%.
En Argentina, the third largest economy in Latin America, the strict quarantine and the productive paralysis will cause a 9,9% decline of its GDP this year, the institution calculated, with a projected recovery of 3,9% in 2021.
A global shock
The IMF also dramatically lowered its forecast for the global economy to -4,9% for this year, dragged down by the 8% fall in the United States' GDP and the handbrake on activity in China. For the first time, the entity emphasized, all regions of the world will experience negative growth, although with substantial differences.
Downside risks remain significant, he added, and the future scenario will largely depend on countries' ability to contain the health emergency, reactivate production and employment, and revive domestic demand.
Source: Reuters
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