Latin American and Caribbean governments will need to provide sustained stimulus efforts to get out of the economic crisis caused by the coronavirus pandemic, a new report from the United Nations suggests.
The study released Tuesday by the UN’s Economic Commission for Latin America and the Caribbean (ECLAC) said the region will require “expansionary fiscal policies” to help keep economies afloat.
“International cooperation is key to amplifying the space for macroeconomic policies,” said ECLAC Secretary-General Alicia Bárcena.
The report noted that the countries of Latin America and the Caribbean are expected to contract by an average of 9.1 percent, which would be the worst single-year contraction on record.
Many Latin American countries are beginning to open back up their economies despite warnings from experts to not fully reopen.
“We want to point out that the effects of this crisis over the next year will be worse and longer drawn out than previously thought,” Bárcena added. “It’s going to take a few years – yes, years – and the recovery will be slower than the 2008 financial crisis.”
Already there have been an estimated 34 million jobs lost in the region due to the pandemic. The declining labor market and a decrease in peoples’ savings are just two factors that indicate a long-term economic recovery is ahead as inequality and poverty surge to historic rates.
The ECLAC report suggested that tax collection pick up so that governments can use increased public spending on providing essential stimulus packages for people. ECLAC officials highlighted that countries will need to cut out corruption and tax evasion to successfully implement these needed economic boosts.
The UN agency said in its report that it expects public spending to pick up from 21.7 percent of the region’s GDP in 2019 all the way to 25.4 percent.