Latin America To Face Deepest Economic Fall in a Century: ECLAC

The economy in the region will face the deepest contraction in a century, 9.1 percent, according to a report published on Wednesday by the Economic Commission for Latin America and the Caribbean (ECLAC).

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"An even greater increase in unemployment is now expected, which in turn will cause a significant deterioration in the levels of poverty and inequality," said Alicia Bárcena, Executive Secretary of the ECLAC during a virtual press conference.

The report foresees that taking into account that both the external and internal shock have intensified, the region will show a drop in the gross domestic product (GDP) of -9.1 percent in 2020, with decreases of -9.4 percent in South America, -8.4 percent in Central America and Mexico and -7.9percent for the Caribbean excluding Guyana, whose strong growth leads the subregional total to a smaller contraction of -5.4 percent.

The organization estimates that the number of unemployed would reach 44.1 million people, representing an increase of close to 18 million compared to the level of 2019, when 26.1 million people were left without a job.

The dramatic contraction will severely impact on household income and the satisfaction of basic needs. In this sense, poverty will increase by 45.4 million in 2020.

Last year, the total number of people in this condition amounted to 185.5 million. However, in the aftermath of the COVID-19 pandemic, the number of poor people will rise to 230.9 million in 2020. This figure represents 37.3 percent of the Latin American population.

Particularly, extreme poverty is expected to ascend by 28.5 million, going from 67.7 million people in 2019 to 96.2 million people in 2020.

As global demand contracts, ECLAC warns that the value of regional exports will fall by 23 percent. In comparison, the energy exports will decrease by  39,3 percent, damaging severely the economies of South America nations that primarily rely on fuel as one of its main assets.

According to the organization, the most significant increment on the poverty rate will occur in Argentina, Brazil, Ecuador, México, and Peru.

On the other hand, the list of countries hardest-hit by extreme poverty includes Brazil, Colombia, Ecuador, El Salvador, México, and Nicaragua.

The ECLAC highlights that the current crisis is having an unproportionate impact on women, as most of them suffer an overload of unpaid works; increment of poverty; job insecurity, limited access to public services; and insufficient funding for politics regarding gender equality.

 Nevertheless, women are in the first line of response to the health crisis as they represent the 72,6 percent of people occupy in this sector in Latin America.