When 2019 became 2020, Latin Americans hoped they were leaving behind their “second lost decade” for one of greater growth and solid middle-income prosperity.
But, after the onslaught of the novel coronavirus, the International Monetary Fund (IMF) is projecting yet another “Década Perdida” for Latin America and the Caribbean. It’s “highly likely” there will be no growth in the region over the period from 2015 to 2025, the head of the IMF’s Western Hemisphere department, Alejandro Werner, told reporters.
The IMF’s projections show GDP per capita across the region will be lower this year than in 2008, meaning Latin Americans are effectively poorer now than they were 12 years ago. GDP per capita began falling in 2019 after unpredictable populists took power in Brazil and Mexico, the region’s biggest economies, and protest movements caused disruption in Chile, Colombia, and elsewhere.
There were hopes that in the new decade a climb in global growth and commodity prices would boost the region, and that newly emboldened civil society movements would push for more government reform.
Covid-19, however, has sent the global economy into recession and oil prices have collapsed. While governments in Peru, Chile, and Colombia have won praise for their effective responses to the crisis, the approaches in Brazil and Mexico have ranged from haphazard to near denial. There are more than 100,000 confirmed Covid-19 cases across Latin America and more than 5,000 deaths from the illness, according to researchers at Johns Hopkins University.
As a result, the IMF projects regional GDP to shrink by 5.2% this year. It will likely climb in 2021, but it will take longer than just one good year to recover from 2020, Werner said. “It’s not only this shock, it’s the cumulative negative shock that the region will have gone through in the decade going from 2015 and 2025,” Werner said.