The following report was distributed by the Economic Survey of Latin America and the Caribbean 2020 – David, Blogmaster
(October 6, 2020) It will be essential to maintain and deepen active macroeconomic policies to achieve recovery and economic and social transformation after the crisis unleashed by the coronavirus pandemic, ECLAC indicated in a report entitled Economic Survey of Latin America and the Caribbean 2020. Main conditioning factors of fiscal and monetary policies in the post-COVID-19 era, released today by its Executive Secretary, Alicia Bárcena, during a virtual press conference.
This new edition of the survey, one of the main annual reports produced by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), presents an analysis of the economic effects caused by the pandemic in each country of the region and offers policy recommendations for addressing them, above all in relation to fiscal and monetary matters, while also highlighting the importance of international cooperation.
“The COVID-19 pandemic is having historic negative effects in economic, productive and social spheres, with lasting consequences and medium-term effects on growth and increased inequality, poverty and unemployment. That is why the process for economic activity (GDP) to return to its pre-crisis levels will be slower than what was observed during the subprime crisis (in 2007-2008),” Alicia Bárcena indicated upon unveiling the document.
According to the report, Latin America and the Caribbean is experiencing its worst economic crisis in a century, with an estimated -9.1% contraction in regional Gross Domestic Product (GDP). As a result, by the end of 2020, the level of GDP per capita will be the same as it was in 2010 – which means that there will have been a 10-year setback, with a sharp increase in inequality and poverty.
In addition, 2.7 million formal businesses are forecast to close in 2020, while unemployment is seen affecting 44 million people (with an increase of 18 million people versus the level seen in 2019, marking the largest surge since the global financial crisis).
Furthermore, poverty is seen reaching the same levels observed in 2005, meaning that it would suffer a 15-year backslide, affecting 231 million people, while extreme poverty is forecast to reach 1990 levels, entailing a 30-year setback and affecting 96 million people.
“In this scenario, active macroeconomic policies will be needed to resume growth and to promote an agenda for structural transformation. Public revenue must be strengthened, conventional and non-conventional expansionary monetary policies must be maintained, and macroprudential regulation must be bolstered along with the regulation of capital flows to preserve macro-financial stability in the short and medium term. International cooperation is fundamental here to expand macroeconomic policy space,” ECLAC’s highest authority explained.
With regard to fiscal policy, the Economic Survey 2020 indicates that countries have made diverse fiscal efforts to mitigate the pandemic’s effects, amounting to 4.1% of GDP on average and accompanied by state credit guarantees of up to 10% of GDP. These fiscal efforts – along with declines in public revenue – have contributed to a bigger fiscal deficit and increased public debt.
In this sense, the document indicates that the challenge is to maintain an active fiscal policy in a context of greater indebtedness. To achieve this, active fiscal policies are needed in a framework of fiscal sustainability that is centered on revenue. Latin America and the Caribbean must increase its tax collection, which is currently 23.1% of GDP on average for the region’s national governments, compared with the 34.3% seen among countries of the Organization for Economic Cooperation and Development (OECD). To do so, States must fight tax evasion and avoidance, which amounts to 6.1% of regional GDP; consolidate individual and corporate income taxes; broaden the scope of taxes on wealth and property; and establish taxes on the digital economy and corrective taxes, such as environmental levies and others related to public health.
“Active fiscal policy must link the short term (emergency) with the medium and long term, to shift the development model towards productive transformation with sustainability and equality,” Alicia Bárcena stated. “Countries must orient public spending towards reactivation and economic transformation, strengthening public investment in sectors that foster employment, gender parity, social inclusion, productive transformation and an egalitarian transition towards environmental sustainability,” she added.
To expand policy space, ECLAC proposes better distributing global liquidity through international cooperation. In this area, multilateral credit institutions must be capitalized to expand their financing capacity and liquidity, both at the current juncture as well as with a longer view. Also, cooperation between central banks should be institutionalized to sustain expansionary monetary policies as well as those aimed at preserving macro-financial stability, and the global and regional financial safety net must be expanded to counteract the negative effects of volatility in financial flows at times of systemic crisis.
In this vein, the Fund to Alleviate COVID-19 Economics (FACE) initiative – presented recently by the government of Costa Rica – is an example of an international cooperation mechanism to improve the distribution of global liquidity so that it reaches developing countries.
The report also stresses that debt relief and restructuring for countries with vulnerabilities and a heavy burden of interest payments is necessary for expanding policy space. Currently, middle-income countries account for 96% of all developing countries’ debt (excluding China and India), which means that it is urgently necessary for the international financial community to expand liquidity conditions to address financing needs on a global level.
“Providing debt relief on interest payments would increase the availability of resources for development,” Alicia Bárcena emphasized. “In this area, there is an imperative need for debt relief in the Caribbean. ECLAC has advocated for financial support so that vulnerable economies in the Caribbean can generate resilience through an initiative to reduce their debt and the creation of a Caribbean Resilience Fund.”
More information:
- LIVE BROADCAST.
- Full document: Economic Survey of Latin America and the Caribbean 2020.
- Presentation by Alicia Bárcena, ECLAC’s Executive Secretary (in Spanish).
- COVID-19 Observatory in Latin America and the Caribbean.
Will someone with access to Hansard plse publish Owen Arthur’s speech on the reply to the Budget in which he said Barbados should de-couple from the Greenback and peg to a basket of currencies. I have not read the original.
At the time, a well respected Barbadian emailed me to draw it to my attention. I won’t say what he said at the time.
why didnt OSA decouple then? he had 14 years so to do
This is made for interesting reading.
”Barbados’ debt levels likely to rise by year-end
The World Bank is painting a dim picture of the Barbados economy for 2020, with a forecast that the economy would shrink about 11.6 per cent.
In its semiannual report of Latin America and the Caribbean region, the World Bank said “a steep decline in growth is projected for 2020 due to the COVID-19 pandemic”.
The document – the Cost of Staying Healthy – was released late Friday.
The Washington-based financial institution said the fallout in the tourism sector and disruptions to local production were expected to depress growth, resulting in a third consecutive year of recession.
“The fiscal and external accounts are expected to deteriorate substantially,” it added.
“High levels of public debt limit space for counter-cyclical fiscal policy to lift growth and reduce poverty. Downside risks are very high considering the country’s heavy tourism dependency and vulnerability to shocks from economic and natural disasters,” it said.
The World Bank is predicting that Barbados’ debt levels could rise to 133.6 per cent at the end of this year before going back down to about 124 per cent next year.
We in for a rough time, in spite of the gallons of Kool aid MIA AMOR MOTTLEY dishing out.
”Barbados told not to expect debt relief”
A top official of the World Bank has poured cold water on any hopes of Barbados getting debt relief from lending partners.
World Bank Chief Economist for Latin America and the Caribbean Martin Rama said countries in the Caribbean should not count on getting any debt relief and should therefore look seriously at other alternatives of effectively managing and growing their economies.
He was speaking with journalists from the English-speaking Caribbean, on Friday, when aspects of the World Bank’s semi-annual report, The Cost of Staying Healthy were discussed.”
A lot of academic and bureaucratic fluff. 🎯 tossing.
Sooner or later they will crank up the printing machines.
Wuh Loss !! I wonder what is surprising about these projections. I suppose they are more acceptable when they are penned by commenters from “over and away”. Lol!! We tend to forget the data is generated and collated locally.
@Vincent
There is benefit from a consolidated report such as this one.
@ Greene
You are being naughty. Owen was an economic expert. Just ask the president.
Nuff nuff big talk. Wuh it mean?
Wait since when the IMF or anyone else for that matter can speak to a rebound in the economy when not even the WHO is able to predict the rate of future covid infections and it’s impact on the global economy?
The rebound of our local economy will depend on 2 things. 1 is how will the rate of future infections behave over the next 3 months and 2. How quickly can we diversify our economy so it is not as dependant on tourism? be it to agriculture or alternative energy.
Ask any hotelier and he will tell you he had a few bookings in the first quarter but is now receiving cancellations daily. Especially out of the UK and Europe. Forget the USA THEIR new cases will blow up in November as a result of all the mass rallies and no mask wearing so they out the picture.
Book smart forecast versus street smart reality. We are in for a rough 1st quarter compared to last year especailly in light of the fact the covid effect didn’t hit us to the end of the winter season last year.
@John A
If the rebound is uncertain for the reasons you cited is this not why we use the forecast model using assumptions which may have to be revised?
Wait I forget to ask a question.
What is the local deficit and revenue shortfall as of September 30th 2020 against the estimates we voted on this year?
We hit $400M year to date yet in deficit?
Can’t get nobody to answer this at all at all no matter how I try!
@ Northern
Practically ever major country printing like demons. UK, USA much of Europe. Not sure about Canada as i haven’t seen recent figures for them.
Besides I hear Mr Sikyuh and the big brain committee come up with a plan called BANDIT! It stand for BREK ANOTHER NEW DEFICIT IN THEM! Lol
Anyhow I still waiting for the deficit figure as of September and a tax schedule for we tail to show how we going fiance it. I already advise the dog to expect cut backs in pet food. He could drop a few pounds anyhow ( like the owner).
@ John A
On fire.
@ John A
Ignore it.
@ Hal
Had red peppers with lunch. Lol
Seriously though we really need to discuss this matter in a way that can be easily understood. I mean yes rattle off all the numbers but stop and explain to people the reality.
We know our arrivals in the first quarter of 2021 has to be down on the 2020 first quarter. After all dem didn’t have covid last year and we were open to the end of March fully. So that can not be argued over. Good so if the first quarter is the best quarter and we know we going be down there big-time, where de tail any recovery next year coming from? Plus what you recovering on in 2021 in the 2nd quarter, an economy that was in lockdown
For the comparative period in 2020? Lord if you can’t do that we really doomed. Lol
My point is yes we can play with figures, but it will not mean anything to the 40,000 unemployed. If you want to compare in real terms then compare 2021 to 2019 not 2020 where the place was lock down for 4 months. Lord even a shop keeper like me will do better open in the 2nd quarter of this year than last year when the one door was pull in and the lights turn off.
Again I say book smart isn’t street smart. To the taxi that lost his car to the bank or any of the 40,000 jobless that home, making nonesence statements mean nothing.
So again I ask will somebody please tell us how you plan to run the country on 30% less revenue than budgeted in the estimates and how do you plan to bring our expenses closer to our reduced income? Or will we go on and is and run up a massive deficit by year end? What is de plan?
Left out the fancy footwork and empty statements and answer that.
I hereby now step down off my soap box!
@ David.
Not at all, let me tell you the problem with forecast numbers based on previous performance.
Suppose I was closed last Sunday from mid day, but i will be opened this Sunday all day. I can forecast that I expect an increase in sales this Sunday of 20% over last Sunday and my statement would be correct. The problem is if I closed last Sunday half day what value does my statement have in real terms? It has absolutely none.
It’s like us looking back at yesterday if the rained poured and saying today traffic was better, without taking into the discussion that today was sunny. So it’s a matter of content versus context in the statement. Not that the statement is wrong but as the young people say ” wunna ain’t really saying nutting.”
@John A
Are the world financial institutions forecasting based on historicals?
@John A
Did you listen to Jeremy’s opinion? Also Justin Robinson was in the media today expounding on this matter.
https://youtu.be/VQU0JMMD-YM
@John A
Your have enormous stamina. Our leaders are not interested as long as they get their cut and the people who suffer most do not care as long as they get corned beef and biscuits.
More fun listening to Kirk talking shyte about jetties. Maybe they can put one in SGN? He has a “quote”, why doesn’t he direct us to the public tender call, and give us the three low bids at the time of the public opening of all bids?
David
It is amazing the level of advice given to Caribbean, South, countries.
At a time when the people behind the scenes in Western capitals are starting to accept that Western of White systems can go no further.
Yet we are being told about following more useless prescriptions which have never worked for us and never will. Never designed to make us better.
Is the recent economic failure of the Mugabe regime not a signpost that we are at the beginning of the end, at least.
Or White
@Pacha
A dichotomous argument if ever there was one. The so-called development countries create the world of globalization with all the rules etc, they they engage in practices that forced a self induced economic coma, then they say do not look for assistance from the countiand agencies controlled by said countries for assistance.
Go figure!
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@David
The Dullard is surprised that you still put so much confidence in the numbers coming from the likes of the IMF. ECLAC and the like.
I thought by now you would’ve realized that these institutions possess no greater insight than any keen observer.
This latest IMF report on Bim is just speculative nonsense.
@Dullard
That is not a nice way of phrasing the issue. Here are the entities we are in bed with, the players we owe many millions and who by condition deliver technical assistance. It is important to share the analytics they use to informed positions. The rest will be up to us.
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@ David
Yes I read Jeremy’s comments and agree with him that the forecast is generous to say the least. I say that for all the reasons I listed above as well.
We also have to factor in the 40,000 unemployed. If they were receiving benefits last year and by the 2nd quarter next year they are not, then their spending power must be removed from the equation.
I know in the short term they are going to get $400 a week I heard, but this government can not afford to do that for more than 2 months or so maximum. If they try to do more than that they will deplete what ever the source is of the funds, whether it be the NIS who we know is also now under immense strain or any other goverment entity.
They are many factors missing from that forecast based on our domestic reality for me to feel any level of comfort with it.
@John A
The 40k occurred in the full national shutdown period. One has to assume many returned to work since. Not suggesting the unemployment number is not still high.
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@David
Fair enough, you adopt the diplomatic approach. But not me…
These guys have no monopoly on analytics and insight. At best, they often adopt assumptions which are devoid of context; at worst they get it totally wrong. The question is whether we can do better with our local institutions like BSS, CBoB, Min of Fnance, etc. History shows that we can’t.
Perhaps you are right!
@Dullard
We can do better. There is always opportunity to improve. Clearly our model needs to be tweaked given the changing landscape.
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@ Dullard
Plse read Olivier Blanchard, former chief economist at the IMF, who was forced to apologise for bogus theories. He was an exception to accept he got it wrong on the Washington Consensus.
We must never stop challenging received wisdoms.
https://www.imf.org/external/pubs/ft/spn/2010/spn1003.pdf
What ARE you people saying – that the “superior” western civilization effed things up? Again?
@ Dullard
https://www.imf.org/external/pubs/ft/spn/2010/spn1003.pdf
I am happy to read that the BU household is waking up to the realities of the economic situation. The most important is that change is inevitable and that we have to develop techniques to leverage the opportunities made available by those changes. There are no templates as to what constitute effective policies. One is either wise or unwise.
@ Donna.
Barbadian policy makers do not have to follow the policies designed for the Developed Countries. We need to focus on what is useful and beneficial for us. We all have 52 ounces of brains and equal opportunity to develop appropriate economic strategies.
@John A 3:12
Not an economist and not going to any at being one.
I think your referencing of a baseline is an important fact. 7.4 relative to what.
Question:
Could the 7.4 also reflect that our economy suffered worse than others? If we were at 80% then 7.4 would bring us to 86. On the other hand a man at 87 then a one percent increase takes him to 88. Can we look at the numbers that way?
https://www.statista.com/statistics/533712/unemployment-rate-in-barbados/
This has 2020 unemployment at 11%. Can someone explain? I can see how you can get from 11 to 14 and the trend is in the right direction… Greater unemployment..
What about the 40%?
@DavidOctober 15, 2020 6:59 AM
You need to realize these ‘developed’ countries are equally lost. If we go back to the local default/restructure, you may recall the video where Lee Buchheit spoke to the difference between the financial (and other factors) and the political factors at play. What we saw in the first 9 months of 2020 was a full dress rehearsal. Now, the real show begins. @Pacha must be ‘licking his lips’… lol
@NO
So true.
We live in a time where uncertainty abounds.
@ David
I would say that the 40,000 is still with us. The tourism sector has not returned and the private sector has been laying off quietly for weeks. The economy is not any better than it was 3 months ago and contraction is continuing.
Remember we too are talking about the 40,000 being the official figure. The unofficial count could be 10000 higher.
@ Theo
The problem here is that the comparison figures may be right but the question is are they relevant?
What I mean is this. If we say we are expecting an increase is the comparison relevant? So anyone could say I expect a 30% increase in the second quarter this year and be correct, as the second quarter in last year the island was closed. It’s not that the numbers may be wrong it’s more the relevance of the comparison.
Personally I feel a fairer comparison would be 2021 to 2019, in other words 2 periods where 12 months of trade are recorded uninterrupted. We have to be real here if we want to see how far off we are to getting the economy back to where we can reemploy the 40,000.
I would hope you know that I was being facetious.
I have a healthy respect for my own brain.
I do believe black people are fully human, you know.
@ David Bu
Uncertainty always abounds.It is just that some periods are more stable than others, The elements that destabilize , for the most part, have their origins in man, who not understanding the system, engage in inappropriate actions.
I’m an economic hitman!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
But that won’t stop some from talking shiiiiiit.
Regardless of what MIA AMOR MOTTLEY Govt. tell Barbadians, we are are in for a rough time as we go forward.
Nothing the GOVT. do will soften the impact on citizens pocket books. Poverty rates will skyrocket and there will be much gnashing of teeth of Barbadians.
”Coronavirus pandemic to blow $28 TRILLION hole in global economy
This year’s output figures will be reminiscent of the 1930’s Great Depression, according to the International Monetary Fund (IMF). It said that the world is at risk of significantly lowered investment, trade and job numbers.
The IMF’s economic expert, Gita Gopinath, said this week that “the cumulative loss in output relative to the pre-pandemic projected path is projected to grow from $11 trillion over 2020-21 to $28 trillion over 2020-25…this represents a severe setback to the improvement in average living standards across all country groups.”
As the economy continues to worsen
Brazen criminals are on the increase
A video circulating on media shows the future of a barbados where criminality active would increase and having a govt who have all but thrown its hands in the air not knowing on to tackle crime and violence
Also the story of a farmer losing over thirty thousand dollars of food and livestock along with video cameras tells the plight of a country heading downward into the cesspool of ongoing criminality activity