Dora Villanueva

La Jornada newspaper
Wednesday May 27, 2020, p. 25

The rapid spread of Covid-19 in all Latin American countries, the changes in capital flows and the low prices of basic products will imply an extraordinarily deep contraction in the region this year, said the Institute of International Finance (IIF, for its acronym in English).

The association of financial institutions predicts a decrease of 7.5 percent in 2020 for the region, which will imply a deeper accumulated loss of real income than in the global financial crisis, he stressed.

Even if a speedy recovery is sustained in Latin America, the legacy of a long period of poor growth results will weigh in the policy space and generate a challenging political and social perspective, the agency stressed when publishing new growth forecasts for the region. .

The most striking feature of this recession is its speed, he added. A single quarter will cost the region about 10 percent of its production. Meanwhile, in 2008-2009 real income returned to pre-crisis levels in five quarters.

In the case of Mexico, he explained, the stagnation that growth was already registering, coupled with the impact of the current crisis, will bring economic activity well below the trend of recent years. It is projected to contract 8.7 percent.

In Argentina, the disease came when the economy began to stabilize after the 2018 financial crisis. In this sense, the accumulated loss of income is expected to be colossal and comparable to 1998-2002, with a contraction of 9.7 percent.

For Brazil, which brings a slow and very incomplete recovery from the recession of 2015-2016, the decrease in GDP this year will be 6.9 percent, considers the IIF.

OECD records drop in growth in 26 countries

From January to March – when the physical distancing measures to reduce the spread of Covid-19 were implemented in several nations – the GDP of the Organization for Economic Cooperation and Development (OECD) contracted 1.8 percent, as activity fell economic in 26 of the 37 countries that comprise it.

This is the biggest quarterly decline since 2.3 percent in the first three months of 2009, when the global financial crisis was at its peak.

France topped the list, with a contraction of 5.8 percent annually; Slovakia (5.4), Spain (5.2), Italy (4.7) and Belgium (3.9) followed.

Canada, Germany and the United Kingdom decreased 2.6 percent, 2.2 percent and 2 percent, respectively; United States, 1.2, and Japan, 0.9, in the first quarter.