Surging COVID Infections Could Hamper Economic Rebound in Latin America: IMF

Economies in Latin America are bouncing back at a pace faster than previously anticipated, but the surging COVID infections in recent weeks may thwart this rebound, the International Monetary Fund (IMF) has warned.

The region has remained the biggest victim of the pandemic. Over the past year, 18 million of its citizens contracted the virus, with half a million of them dying of the disease.

“Failure to contain new infections, the imposition of new lockdowns, and the consequent change in people’s behavior would all weigh on growth,” wrote Alejandro Werner, the Fund’s Director for Western Hemisphere, in a blog post.

The international lender has urged all the countries in the region to keep stimulating their economies, ensuring that their healthcare sector does not run out of cash at this moment of crisis.

Central banks in countries with low inflation should keep interest rates at record low levels, the lender insisted, saying the high cost of borrowing could hamper growth.

The fund, in the meantime, raised the region’s growth projection from the previous 3.6% to 4.1%.

According to the recent update of the World Economic Outlook, Peru is set to grow at a stunning 9%. Brazil and Mexico, the region’s large economies, are estimated to grow by 3.6 % and 4.3 %, respectively.

However brisk is the growth, the region will not see its output grow to pre-pandemic levels until 2023 and gross domestic product per capita until 2025, according to Werner.