The horror of war” is how Cynthia Viteri, Mayor of Guayaquil, Ecuador, described the effects of Covid-19 on Guayaquil, Ecuador, one of the cities worst affected by Covid-19 in Latin America. Recovering from the ‘war’ will require not just a humanitarian response but a strategy to face up to the economic losses caused by the pandemic.
Much has been said about the short-term impacts of the virus. As yet, not enough attention is being paid to Latin America’s capacity to absorb the long-term economic impacts of Covid-19. Although the full cost to the region’s economies is not yet clear, it seems almost certain that the economic and financial implications will push Latin America into a recession, one that is likely to be on par or worse than the 2008 global financial crisis.
Why will the crisis be so profound and how will the region exit from it? One reason is the structural vulnerability of Latin American economies exacerbate the costs of the pandemic. Even when growth takes place in the region, the benefits are felt unevenly across society. Exiting the economic crisis caused by pandemic equitably will demand planning by governments and international and regional organisations to move the region away from the economic ‘normal’ towards inclusive development for the long term.
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