The Limited Times

Now you can see non-English news...

Adriana Arreaza: "The economic impact of the covid in Latin America will be greater than anywhere else"

2020-11-16T22:28:48.492Z


CAF's director of macroeconomics assures that many countries will have to face structural problems such as informality or access to education


Adriana Arreaza, director of macroeconomic studies at CAFCAF

Adriana Arreaza was on a work trip in Brazil when the first cases of coronavirus were reported in Latin America.

Before returning to his native Venezuela, he also traveled to Colombia and Panama;

an itinerary that, just a few days later, would no longer be possible.

“A week later the strict quarantines began here and there I realized that this was already another level of pandemic,” he says by video call from his home in Caracas.

Impeccably dressed in a white jacket, Arreaza speaks with EL PAÍS on a Friday morning.

"The region has not yet managed to dominate the pandemic and more and more one realizes that this, perhaps, is something with which we are going to have to live for longer than we initially thought," says the economist.

Her work as director of macroeconomic studies at CAF-Development Bank of Latin America suddenly became much more time sensitive.

Trying to study the economic impact in the medium and long term in the region took the dizzying pace of uncertainty.

Unemployment, fiscal deficits, social support, productive investment: the data and indicators of each country are their work material and, when they fluctuate every day, it becomes more difficult to forecast what is coming.

"As Latin America has hit so hard, more than other emerging economies, that has determined that the economic impact here in the region will be greater than anywhere else," says Arreaza, also a professor at the School of Economics of the Andrés Bello Catholic University (UCAB).

Q.

We have seen that banks and multilateral organizations have updated their economic growth forecasts many times in recent months due to the pandemic, something that they did not use to do.

Has the CAF had to do the same?

A.

We estimate a drop of 8.6% for this year and a recovery of around 4% for 2021. As you say, the estimates have progressively changed in our case as well.

A few months ago we estimated a drop of slightly more than 9%, but recently what we have seen is that the recovery in some economies has been more accelerated, particularly in Brazil, which is the largest economy in the region.

And when you take the weighted average that influences the figure.

But there is an immense dispersion that in the region.

You have countries with double-digit falls, such as Peru, where we currently expect a record drop of 13%, and countries that are only going to fall by around 3%, such as Uruguay and Paraguay, where no the pandemic hit so hard.

What is undeniable is that the impact has been very strong and, until the pandemic is controlled, the confidence of companies and consumers will not return in a solid way to do what companies and consumers want to do. to the street, buying goods and services.

That is not going to happen until it is controlled.

And of course, there are going to be very different impacts in the region.

Perhaps, for example, energy producers, because the price of energy has not recovered, will have a slightly more lethargic recovery.

Countries that rely heavily on tourism such as the Caribbean will also have a slightly slower recovery than in a country where public policies were quite aggressive in terms of injecting spending into economies or lax monetary policies.

There is also a space so that during this hibernation phase, where the activity has been more or less stopped, a significant number of companies have not died and once the demand is reactivated, it has the supply capacity to respond to that demand. .

Q.

During this pandemic and since the wildfires in Australia, then Brazil, and now the United States, a discussion has emerged about the cost and feasibility of endless economic growth.

Environmental activist Greta Thunberg called it a "fairy tale."

What do you think is the future of this idea of ​​economic growth?

R.

This is something that has been happening in a very heterogeneous way in the world.

But I think there is a greater awareness of the importance of having growth that is environmentally sustainable.

The issue of clean energy, recycling, the issue of efficiency in the use of energy is something that a couple of decades ago was not even present in the debate and at this time it is.

Of course, there are certain difficulties in some emerging economies that perhaps are not very efficient in the use of clean energy and that the West says that this is not viable.

The answer is usually: 'To get where you are, you too had to pollute for two centuries.

Now it's our turn. '

There is a complication there.

Environmental issues generate very negative externalities in cities.

You who are in Mexico City know the problem.

There are certain things that begin to touch you directly and this is where you begin to react.

Perhaps here I am a bit optimistic, insofar as I see that there is the capacity to adapt, that the issue of climate change is present in the discussions.

Perhaps there are countries that are more or less willing to move, but I think that at the end of the day we are all going to end up moving towards a growth that is a little more sustainable than we are currently experiencing and that some of the reforms will indeed be carried out. necessary.

Q.

Speaking of the future, what will the Latin American economy look like?

What is the future of the region?

A.

The region was coming off a period of low growth and a relatively moderate recovery was underway.

The covid derailed that recovery.

But that was not the only thing that derailed, but rather exposed structural problems in the region, the weakness of public health systems, the capacities of the State.

This was in Latin America perhaps it is more evident, but it did not only happen here.

There have been issues of corruption in emergency purchasing in many countries.

Inequality in terms of income, in terms of access to education.

Today the region is going to have to, suddenly, face some of these structural issues that were pending.

And for some countries the fiscal situation has also become much more complicated.

We have seen how some economies that were in a situation of compromised liquidity went into a situation of insolvency and have had to structure their debts.

Other countries are going to live with higher levels of indebtedness and are going to have to resort to some austerity in the medium term.

And other economies that had more fiscal space are perhaps not going to have their substantial problems, but that is a minority of countries.

There is a very complex situation going forward and I believe that an important task for the region is that unemployment that we are going to have.

The problem of informality is very delicate, it is serious in the region, because they are jobs not only with low productivity, but also with low incomes and without access to social security systems.

Therefore, this is an opportunity to carry out some of the reforms that tend to increase the productivity of the economy and have a greater formalization.

In most countries, much of the government aid was made through conditional cash transfer programs that you had previously, as in the case of Brazil.

Something similar happened in Peru.

Only in countries that have a more or less consolidated social security system, such as Uruguay, did this function as an automatic stabilizer of the economy.

So they have a task.

Informality is a problem in the region that directly affects people.

There is this task, this opportunity, so to speak, to make some of the changes to further formalize economies.

There is a rather complicated balance because you have this task of preserving fiscal sustainability, you have this task of juggling spending towards something that allows you to increase growth and close infrastructure gaps.

And on the other hand, you should have a series of reforms to encourage more sustained growth in the medium and long term.

This is a difficult task for the region, which will have to face it in the coming years.

Source: elparis

All business articles on 2020-11-16

You may like

News/Politics 2024-03-08T16:47:45.296Z

Trends 24h

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.