Brazil is expected to grow below Latin America’s average until 2023 – IDB

RIO DE JANEIRO, BRAZIL – Brazil is expected to help push down Latin American growth, according to projections for this year and the next two years made by the Inter-American Development Bank (IDB).

While the Gross Domestic Product (GDP) growth scenario projected for the average of Latin America and the Caribbean is 3.2% between 2021 and 2023, Brazil should grow 2.7% in the period.

When excluding the Brazilians from the list of the so-called Southern Cone countries (which includes Argentina, Chile, Paraguay and Uruguay), the expectation is for GDP growth of 3.5%.

IDB’s Chief Economic Adviser Andrew Powell ponders that Brazil will have lower growth in 2021, in part because because it has come through the recession better in 2020. “Brazil has significant challenges: it needs to enact a set of pro-growth reforms, as well as adopt a fiscal policy that maintains confidence and ensures fiscal sustainability, stabilizes rising public sector debt, and gradually reduces debt levels.”

The way for the entire region to more efficiently overcome the challenges posed by the pandemic involves measures such as deepening regional integration, reducing informality, supporting small and medium-sized enterprises during economic recovery, and freeing up fiscal resources for greater public investment in infrastructure, while also attracting private investment.

The IDB also points out that the labor market in Latin countries has been heavily impacted by the shock in the international economy and by the containment measures established to try to contain the advance of Covid-19.

An estimated 10% of jobs were lost between February and October 2020. Last month, that percentage had fallen to 7%.

For every formal job lost, about 3.5 informal jobs were destroyed. The institution points out that several countries in the region do not have a consolidated unemployment insurance system, and even in those that do, benefits are limited. “In Brazil, a country with one of the most developed systems in the region, before the crisis only about 13% of unemployed workers received this benefit.”

For the institution, it is necessary to emphasize the false opposition between taking care of the economy and controlling the advance of the new coronavirus pandemic. And Brazil needs to accelerate the vaccination program also to be able to attract investments and get out of the crisis faster.

“We must remember that there is no choice between growing the economy or facing the virus, as experiences around the world show: China, South Korea, New Zealand, Australia and some other countries did well in the fight against the pandemic and are now growing. The countries that had more cases and needed to impose lockdowns to protect health systems are suffering more in the economy, and the health crisis should be the priority,” assesses Powell.

Source: InfoMoney

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