The International Monetary Fund believes that crises are opportunities and that the crisis caused by the coronavirus pandemic should help Latin America to implement policies that allow it to grow by reducing social inequality and promoting integration and investment.
What can we do so that we can get out of the crisis better than we entered? Kristalina Georgieva, the IMF's managing director, asked Tuesday, after pointing out some of the reasons that made the region's economy one of the hardest hit in the world by the pandemic due to the slowdown it had been experiencing since before 2020.
Georgieva made her remarks in a virtual conference that she gave at the Council of the Americas.
The IMF has projected an economic contraction of 8.1% in Latin America this year and a recovery of 3.6% by 2021. This is the largest regional economic crisis in history, representing a setback of at least a decade, according to the estimates of multilateral organizations.
The world economy will slow down by 4% in 2020 and grow by 5.2% in 2021, according to the IMF.
A crisis, a deep crisis, must serve for the future, said the director of the IMF.
It should shake us up, she said, noting that the results could have been even worse, if Latin American governments had not implemented monetary policies to protect economies.
Since 2012, Latin America has been going through an economic slowdown that worsened in 2015 and 2016.
The economy was stagnant in 2019, and although a recovery was expected in 2020, which could not materialize because the coronavirus
For the IMF, the pandemic crisis is the first truly global crisis, combining economic and health aspects.
Unfortunately for Latin America, the region is particularly hit hard, added Georgieva after noting that the economic impact is also quite 'dramatic'.
With the pandemic, it became clear that governments do not invest enough in health systems, and that policies have to improve in the future, she said. However, she immediately highlighted as positive that central banks lowered interest rates and financial authorities implemented measures to strengthen spending or reduce tax collection.
There is still a lot that can be done to remove obstacles for the private sector, Georgieva said, but warned that this is only part of the problem.
Governments should also pay attention to the inequity that makes the region one of the most unequal in the world, she continued. This was evident in the pandemic, when people who had access to digital technologies were favored while the poorest sectors could not continue working.
And that can only be fixed with structural policies, with structural reforms, Georgieva explained.
Although inequality has improved in recent years, it still continues and needs to be addressed because it is a structural impediment to growth, the official said.
Likewise, she added, the region should become even more integrated and forge stronger economic ties that allow countries to access larger markets. As an example he mentioned her country, Bulgaria, which joined the European Union to have more opportunities.