“It is time to think about measures that will allow for sustainable development in the region.”
(Transcription of Karina Batthyány's Column)
(In InfoCLACSO – August 11, 2021)
Today, I'm writing about a document recently presented by ECLAC (Economic Commission for Latin America and the Caribbean) entitled “The Paradox of Recovery in Latin America and the Caribbean: Growth with Persistent Structural Problems: Inequality, Poverty, Low Investment, and Low Productivity.” This document touches on several of the issues we've been discussing in our Wednesday columns. To comment on this extensive document, I've chosen three or four points that I think are worth discussing.
First, the Economic Commission for Latin America and the Caribbean (ECLAC) raised its average growth estimate for the region in 2021 to 5.2%. This is interesting and positive, showing a rebound from the 6.8% contraction (I'm still referring to gross domestic product) recorded in 2020, which was obviously due to the impact of the pandemic. So, we have a first piece of positive data. To put it more simply, economic growth for our region is estimated at 5% in 2021. But this expansion or growth phase will not be enough to ensure sustained growth, and ECLAC itself says this is due to the social impacts of the crises and the structural problems that our region already had and which have been exacerbated during the pandemic. What structural problems? Among others, inequality, as we have mentioned here on several occasions, and these problems have obviously worsened and will persist into the recovery phase.
According to ECLAC projections, average growth in Latin America and the Caribbean for 2022 is expected to be less than 3%, around 2,8% or 2,9%. With 5,2% growth in 2021, the forecast for next year already indicates a slowdown in this "rebound," as we might call it. Why "rebound"? Because the previous year, 2020, saw a drop in these figures that allowed for a rebound to 5% in 2021, but next year's growth is projected to be less than 3%.
So, if we look at these numbers, we cannot anticipate or project that the low-growth dynamic that existed in Latin America and the Caribbean before the pandemic (which was the trend prior to 2020) will change. In other words, we are going to continue, to return to that low-growth dynamic in which we were already entrenched as a region before the pandemic. Why again? Because of these structural problems that limit the growth of our region and, as I already mentioned, were exacerbated during the pandemic.
What structural problems are we talking about? We're talking about problems linked to the causes or underlying factors of inequality. In that sense, this document recently presented by ECLAC also shows us that the current growth rate is unsustainable and that we are projected to return to more mediocre growth trajectories that will not allow for a full recovery of employment and will have greater environmental consequences or deterioration.
There, we are also discussing the impact of poverty, which we have mentioned in other columns, and that impact of poverty especially on women and the elderly. Let us remember that this pandemic crisis has arrived in our region at a time of stagnation and a long-term crisis in employment, investment, and sustainable productive diversification—that is, diversification that does not further damage the environment.
Just to remind you that these projections are for a region that has been among the hardest hit by the coronavirus. The latest available data: as of June 30, the Latin American and Caribbean region had accumulated more than 1.260.000 deaths (let's say 1.300.000) due to Covid-19, representing a third of global deaths when in reality our region only accounts for 8% of the world's population. And let's also remember the enormous vaccination gaps we see today within Latin America and the Caribbean, and in turn, the overall gap between our Latin American and Caribbean region and the regions of developed countries.
All of this leads us to reflect once again on some of the points we raised in our previous column, where we discussed alternatives for the Latin American and Caribbean region, which we had put forward in relation to the CELAC working document. So, what alternatives are we talking about? Once again, we're talking about the policies needed for a recovery in our region, but a transformative recovery, not one that continues to deepen the gaps and inequalities: industrial policies, technology policies, that allow us to boost the growth of more technology-intensive sectors that generate quality employment; restructuring health and education systems; sustaining the transfers that some Latin American countries are making as emergency pandemic relief; and, even more importantly, proposing a universal basic income, or basic income, as we may call it, for our region. Ensuring access to the basic food basket, ensuring access to connectivity, which is a problem in our countries today, and addressing the issue of external debt and the need for a new international financial architecture. In other words, different measures that will truly allow us to start changing things in the remainder of 2021 and in 2022 (which, as we have already seen, does not have a projected high growth rate for our region).
There's a specific topic I want to address in my next column, which is also mentioned in the report we're referencing today, and that's the environmental issue. This report (ECLAC) draws our attention to the environmental impact observed in our region. It states: While there was some recovery during the worst moments of the pandemic and the strictest lockdowns, particularly regarding air quality and the reduction of greenhouse gas emissions, this recovery has not been observed since activity resumed in 2021.
So, let's start thinking about measures that allow for sustainable development and therefore development that does not have such strong environmental impacts as what we are observing today and every day in our region.
I kept thinking: what a sense of missed opportunity I have, at least as I listened to the data you were presenting… Because it seems that the tragedy of the pandemic offered a framework for considering alternative approaches. Listening to the numbers, I felt a sense of a lost possibility, or at least I don't know if it's completely lost. Because I understand that these are still issues under discussion, but it seems that we aren't fully utilizing this opportunity to think about alternative ways out and different approaches… No. That's why it's good to insist on those alternatives that we've already raised many times here at InfoCLACSO, but we must insist on trying to build those alternatives. And I didn't mention it just to spare us the unpleasantness… During the column, I mentioned the latest poverty data, but since you brought it up, the extreme poverty rate in our region has already reached 12.5% of the population, and the poverty rate is 33.7%, meaning that more than one in three Latin Americans are living in this situation. And the same is true for the quantitative increase in food insecurity, whether moderate or severe, which affects more than 40% of the Latin American population. And that's an increase of almost 7 percentage points compared to the pre-pandemic situation: 44 million more people experiencing food insecurity in our region.
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