By Nathalie Basto-Aguirre, Paula Cerutti and Sebastián Nieto-Parra, OECD Development Centre
This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.
Classroom in Jaqueira Village, city of Porto Seguro, Brazil. Photo: Joa Souza/Shutterstock
COVID-19, like most crises, is exacerbating inequalities in the region. To contain the pandemic, most Latin American countries have closed their schools, affecting the learning of 154 million students. However, not all students are affected equally. While distance education can contribute to alleviate the immediate impacts of school closures, it requires a number of conditions to deliver meaningful results. Students from poorer socio-economic backgrounds tend to suffer the most and risk bearing lasting consequences in terms of learning outcomes and, ultimately, opportunities. In particular, three interconnected dimensions stand out. Continue reading →
This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.
Migration has always featured prominently in Haiti’s history. At times forced, as in the case of sociopolitical repression and the aftermath of disasters, induced to fulfil labour and workforce needs in the Caribbean and in other periodsvoluntary as in the circulatory movement recorded in the Caribbean, South and North America. Over the past decades, migration in Haiti has evolved from a survival strategy for individual migrants and their families to now buttressing the local economy through the transfer of remittances. This reality was made evident during the 2010 earthquake rebuilding effort when the Haitian diaspora identified itself as Haiti’s “single largest donor” citing “the magnitude of its remittances to the Haitian Republic and how those contributions totalling [USD] $2 billion dollars annually allot[ed] for 30% of the GNP .” In comparison, public revenues, excluding grants, represent 13% of GDP and are projected to fall to 10% in 2020.
Remittance transfers to Haiti have continued to grow over the past decade, the lion’s share of funds originating in countries throughout the Americas, particularly the United States, where the majority of Haitians have settled. Yet, the global economic crisis brought on by the COVID-19 pandemic poses a serious threat to the global remittance economy. For Haiti, reduction in remittances will further weaken an already feeble economy while negatively impacting the livelihood and health of families and communities. Continue reading →
By Juan Flores Zendejas, Associate Professor at the Paul Bairoch Institute of Economic History, University of Geneva
This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.
Photo: Shutterstock
Today, as in the past, public debate can resort to history in the quest for policy lessons. The COVID-19 crisis is prompting governmental action to meet the needs of large swathes of society and achieve rapid economic recovery. This is adding further pressure on public finances. However, while major stimulus packages are to be implemented in several rich countries, most developing and emerging economies do not have the fiscal capacity to provide similar amounts of financial support. Continue reading →
By Alfredo Suárez Mieses, Secretary-General, Central American Social Integration Secretariat (SISCA), and Gabriela A. Ramírez Menjívar, Head of the Multidimensional Poverty, Human Capital Development and Social Protection Area- SISCA
This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.
Photo: Presidency of the Republic of El Salvador
The COVID-19 pandemic is causing an unprecedented health, economic and social crisis that threatens to leave a deeply negative mark in the SICA region (Central America and Dominican Republic), particularly on employment, poverty, and inequality levels. The depth of the impacts will depend on multiple factors, including the duration of the pandemic, the public policy responses to contain and control it, a country’s economic structure, the strength of its health and social protection systems, and its level of vulnerability to global dynamics. Social protection is a crucial tool to minimize the costs of the crisis; it is also a crucial investment to make the recovery stronger and more inclusive, thus more sustainable.
Measures taken by most countries to flatten the contagion curve, along with the current international environment, have impacted economic activity with direct effects on income generation and living conditions for a large part of the population. According to the latest report of the Central American Economic Integration Secretariat (SIECA), the region’s Gross Domestic Product will contract by 6.8%. The fall in tourism and decline of economic activity in the United States, the main trading partner and the largest source of foreign direct investment and remittances in Central America, are already having negative effects. The Inter-American Development Bank (IADB) estimates remittances could contract by 10% for each point less of growth in the United States. Continue reading →
By Nora Lustig, Professor of Latin American Economics, Department of Economics, Tulane University and Jorge Mariscal, Adjunct Professor of International and Public Affairs, School of International and Public Affairs (SIPA), Columbia University
This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.
Empty streets of Guatemala City during lockdown, March 2020. Photo: Shutterstock
COVID-19 has hit Latin America hard on two fronts. The pandemic and the lockdowns to contain the spread of the virus have shut down significant portions of the region’s economies. However, even if the pandemic were to miraculously disappear from the region, falling demand for exports and tourism, declining commodity prices, interruptions in the supply chain of inputs, shrinking remittances and unprecedented capital outflows are significantly affecting countries’ growth prospects.
The International Monetary Fund (IMF) in its recent World Economic Outlook (April 2020), predicts that the world economy could fall by 3% in 2020 and in Latin America by 5.2% – higher than that observed during the 2008-09 global financial crisis. Still, the IMF’s growth forecasts for Latin America compared to those for advanced countries seem overly optimistic and will likely be subject to downward revisions. Based on data for 48 countries, the OECD has estimated that each month of containment measures translates to an approximate decline in annual GDP growth of up to 2 percentage points. Considering the extent to which the region’s economies depend on trade, foreign direct investment (FDI), commodities, tourism and remittances, in the absence of strong policy responses, we would add an additional decline equivalent to one-third of the total shock. Latin American economies could thus face GDP contractions of 9-10%. Continue reading →
By José Manuel Salazar Xirinachs, Former Regional Director of the International Labour Organisation (ILO) for Latin America and the Caribbean, and former Minister of Foreign Trade of Costa Rica
This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.
Lima, Peru – April 7, 2020. Photo: Shutterstock
The damage of the COVID-19 pandemic and the ensuing global lockdown crisis will be devastating, causing the worst disruption to labour markets in Latin America since the Great Depression. Up to 43 million people – probably more – could be unemployed in 2020. Tragically, the state of labour markets in the region was bad even before the crisis. Repairing the damage while addressing past structural legacies is possible, but it will be slow and challenging, and will require something most countries in the region have not done well in the past: a massive focus on microeconomic policies for accelerated productive transformation, and technological and human talent development.
By Mauricio Rosillo, Corporate Vice president, Grupo Bancolombia
This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide. This blog is also a part of a thread looking more specifically at the role of private sector actors in responding to the impacts of the COVID-19 crisis in developing countries.
COVID-19 is plunging the world economy in the most severe crisis of recent times and threatens hard-won gains in terms of poverty reduction, food security and economic empowerment. What can the private sector, and in particular the financial sector, do to protect and advance sustainable development and well-being for all?
Governments, companies and citizens must quickly adapt to shoulder this unprecedented situation. This is particularly the case in emerging and developing economies where socio-economic vulnerabilities are higher and state capacity is sometimes low. Consequently, support from other socio-economic actors, notably large firms, is even more necessary.
The immediate priority is to protect people’s health and income. This crisis, together with public health measures such as social distancing and restrictions to mobility, is changing daily routines for workers and firms and reducing their ability to generate income. Latin American economies are not immune to these effects. The high levels of informality and vulnerable Micro, Small & Medium Enterprises (MSMEs) make the policy responses more complex. Coordination and coherence across different actors is fundamental to halt the pandemic, minimise the negative socio-economic consequences and put the economy on a strong and sustainable development path. Continue reading →
