Narayan AmmachchiThe economic crisis caused by the COVID-19 pandemic may plunge some parts of Latin America into “social unrest”, a senior IMF official has warned.
Once the pandemic recedes, social unrest will make a comeback, stated Alejandro Werner, the Fund’s director for the Western Hemisphere, in an interview with Reuters.
“Coming out of the pandemic, we will have a level of economic activity and employment that will be much lower than before, a level of poverty and income distribution that is worse,” he said.
The LatAm economy as a whole is estimated to contract by 8.1% this year. It may bounce back, but the recovery will be slower than the rest of the world.
That’s because the pandemic has hit the region harder than other parts of the world, both in human and economic terms. “The relatively large human toll is evident: with only 8.2 percent of the world population, the region had 28 percent of cases and 34 percent of deaths,” the fund noted in a recent blogpost.
Unlike in previous recessions, employment contracted more strongly than GDP. A large majority of Latin Americans cannot work remotely, and most of them lost their jobs when countries after countries enforced strict lockdowns in response to the coronavirus outbreak.
In the region, only about one in five jobs can be done remotely, half the share of advanced economies and below the emerging world average (26 percent).
“Some of the determinants of social unease are going to worsen and that generates our concern for the region,” Werner said.
Add comment