The aftermath of the COVID-19 crisis will take years to disappear if the countries of Latin America and the Caribbean do not take immediate measures to promote a lackluster process of recovery from the pandemic, with poverty at its highest level in decades, he said. October 6, 2021 the World Bank.
According to its new report, ‘Regaining growth: Rebuilding dynamic post-COVID 19 economies with budget constraints’, although regional growth is expected to recover 6.3% in 2021, along with an acceleration in vaccination and a fall In deaths from COVID-19, most countries will not be able to completely reverse the 6.7% contraction that took place last year.
“Which is insufficient to revive economies and reduce poverty,” said William Maloney, World Bank chief economist for Latin America and the Caribbean.
In the case of Ecuador, the growth projection for this year was adjusted. Did the agency foresee an increase in GDP? of 3.4% for 2021 last March and now predicts that it will be 3.0%. For 2022 it is more optimistic. He estimated a growth of 1.4% and now foresees that it will do so in 3.4%
The multilateral body points out that growth forecasts for the next two years fall below 3%, a return to the low growth rates of the 2010s, generating concern about a new lost decade in terms of development.
To achieve the growth rate necessary to move the region forward and reduce social tensions, it must urgently carry out long overdue yet viable reforms in infrastructure, education, health, energy, and innovation.
However, recovery faces multiple obstacles. Any resurgence of the virus will impact growth, while the persistence of the increase in prices worldwide could lead to higher interest rates, reducing people’s consumption.
The agency calls on the countries of the region to rethink public spending priorities. Instead of cutting spending, inefficiency in the public procurement system should be reduced and in the transfer programs, which represent average losses of 4.4% of GDP, it could free up resources for other purposes.
In addition, the World Bank maintains that there is room to increase taxes without affecting growth. Areas to explore include expanding taxes on property and to a lesser extent on personal income, raising taxes on unhealthy food and carbon emissions, and improving collection capacity in a region where the level of tax evasion Corporate income tax is practically 50%.