The Economic Commission for Latin America and the Caribbean (ECLAC) has raised LatAm’s 2021 growth projection to 5.9%, an increase of 0.7% from its July estimation, confirming that the region’s economy is rebounding faster than expected.
However, the UN agency has warned that the growth rate might decelerate to 2.9% in 2022.
Considering the report, the economic fundamentals have not changed much, even though the region is reopening its economy after months of travel restrictions.
“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,” stated the ECLAC.
The 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.
In addition, the region 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.
To achieve swift and sustainable growth, the region should invest in education, renewable energy, and digital technologies.
ECLAC has insisted that the region must put an end to tax evasion, saying that it represents around US$325 billion (or 6.1% of regional GDP).