The region is facing the sharpest drop in GDP it has ever had, and Mexico is one of the most exposed countries, according to the agency.
Latin America is facing the beginning of “a deep recession”, with a contraction of the regional Gross Domestic Product (GDP) that will reach 1.8% to 4% in 2020 due to the world expansion of the coronavirus, ECLAC estimated this Friday.
“We are facing the beginning of a deep recession. We are facing the strongest fall in growth in the region, ”said Alicia Bárcena, executive secretary of the Economic Commission for Latin America and the Caribbean (Eclac), a technical agency of the United Nations based in Santiago.
The expansion of the coronavirus will have a special impact on Latin American countries, which were already experiencing a weak economic context after the mediocre growth recorded in 2019, of only 0.1%.
In this scenario, the decrease in economic activity in the main trading partners of the region, the fall in the value of raw materials and the blow in areas such as tourism, will lead the region to a drop in GDP in a range of 1.8% to 4%.
The 1.8% contraction considers only the effects in Latin America of the economic fall of China, the main trading partner of the region, but if the economic collapse of the countries that make up the European Union, the United States and the rest of the country is added. In the region, the impact will be much greater, in a range of 3 to 4%, Bárcena explained during the presentation of the report Latin America and the Caribbean in the face of the COVID-19 pandemic: economic and social effects.
Containment and # quarantine measures deepen the #care crisis in Latin America and the Caribbean, warned today in #CEPAL @aliciabarcena, during the launch of the # COVID19 report and its economic and social effects in the region. https://t.co/rGQLaD0HCy pic.twitter.com/JcmXP7mfsF
– ECLAC (@cepal_onu) April 3, 2020
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Mexico, among the most exposed
The interruption of supply chains, starting with Chinese suppliers and then with European and US production, would mainly affect Mexico and Brazil, whose manufacturing sectors are the largest in the region, ECLAC said in its document.
He explained that in terms of tourism, in a scenario with a fall in tourism revenue of 10% in 2020 in the region, Mexico’s GDP would decrease 0.3 percentage points, but in a more negative scenario, in which tourism revenue fell 30%, the drop would be 0.8 percentage points.
He indicated that the final impact of the coronavirus on tourism will depend on the repercussions of health and socioeconomic actions in the countries and regions from which the majority of visitors come.
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Regarding exports, the oil countries will experience the greatest loss in the value of sales abroad.
Mexico, Venezuela, Ecuador and Colombia may be the most affected, since their production costs are higher than those of many other producers and, therefore,
they have less capacity to withstand a prolonged period of low prices, argued Eclac.
The agency considered that Mexico and Chile would be the nations most exposed to a drop in exports from China, which supplies about 7% of its intermediate inputs.
Furthermore, Mexico is the country most exposed to changes in the conditions of supply and demand in the United States, especially in the manufacturing sector.
Along with Chile and Brazil, Mexico would be one of the most exposed to changes in supply and demand conditions in the European Union, since around 5% of its GDP depends on the added value of the services and manufacturing sectors in that market.
With information from .