CEPAL projects five major economic risks for the region in 2021.

Even though the economic outlook is more encouraging for this year, the level of uncertainty caused by the pandemic remains high.

According to the World Labor Organization, unemployment in Latin America could reach 11.2% this year, which represents a setback of around ten years, in just ten months.

However, CEPAL predicts regional GDP growth of around 3.7%, with a slower recovery in employment and the distribution of wealth generated.

Thus, CEPAL projected an opportunity and five major risks for 2021:

1. The evolution of the pandemic and the availability of vaccines: it is expected that the effects of the pandemic will be mitigated, especially in the second half of 2021, but this will only happen if the vaccination process in Latin America occurs within the defined deadlines;
2. Premature withdrawal of monetary and fiscal stimulus policy measures: the early cut of fiscal stimuli and central bank measures for countries’ recovery could harm economic growth;
3. Deterioration of global economic and financial conditions: estimated growth for Latin America also depends on international financial conditions and, if these worsen, countries that have increased their debt could face major problems;
4. Potential fall in the prices of basic products: it is estimated that there will be an increase in the prices of commodities , but if this does not happen, Latin American countries will suffer a severe blow that will affect their revenues and growth prospects;
5. Increased social and geopolitical tensions: the increase in unemployment, poverty and inequality could intensify latent social tensions in Latin American countries, as well as geopolitical conflicts, including technological and commercial clashes between the great powers, namely China and the United States, which is one of the main trading partners and investors in the region.
6. An opportunity: with this crisis comes the opportunity to move towards more sustainable and inclusive development; What the world experienced in 2020 should be a lesson in overcoming the region’s major structural challenges and, according to ECLAC, governments should now prepare measures to reactivate the economy in the short and long term.

Source: BBC News Mundo | https://www.bbc.com/mundo/noticias-55470982

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