Coronavirus and quarantine: the economy of Latin America will fall drastically and poverty will grow

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The fall will be on average more than 9%, and the number of poor will increase to 230.9 million, 37.3% of the population.

The great social inequalities in Latin America, which are reflected in the digital divide, constitute one of its great burdens that explain that in 2020 the recession will be greater than in the other large developing regions and will set it back to the 2009 level of activity.

In a report published this Thursday, four international organizations led by the OECD recall that the forecasts predict a fall in Latin American gross domestic product (GDP) greater than 9% and they draw the social scene that that is going to entail.

According to estimates from the Organization for Economic Cooperation and Development (OECD), the Development Bank of Latin America (CAF), the Community of Latin American and Caribbean States (CELAC) and the European Commission (EC), poverty in the region could increase by 6.9 points percentage compared to last year.

The decline in regional GDP this year at 2009 level, already predicted months ago, means that the number of poor people will increase to 230.9 million, 37.3% of the population. In addition, extreme poverty will rise by 28.5 million people, to a total of 96.2 million.

In parallel, it is feared that 2.7 million companies, the vast majority small, will have to lower the blind and 8.5 million jobs may disappear.

The impact of the crisis will be strongest in Latin America, particularly because “the pandemic came at a very bad time”, said the Secretary General of the OECD, the Mexican Ángel Gurría, in the online presentation of the report, held within the framework of the UN General Assembly and with the participation of the presidents of Colombia, Iván Duque, and Costa Rica. , Carlos Alvarado.

Gurría referred to the high levels of poverty and labor informality, that affects 54% of the workforce, and said that these informal workers have three or four times less possibilities to be trained in digital technologies, which for the study authors are the great opportunity to get out of the hole.

In fact, the idea that Gurría clinched is that “the countries with the best digital preparation will be the first to emerge from the crisis.”

And there the starting situation is not good considering that the percentage of people with internet connection there is 68% (2018 data), when the OECD average is 84%.

Worse still, among the 20% with the highest income, those connected in Latin America are 75%, while among the 20% of the most disadvantaged they only account for 37%.

There are 38 percentage points of digital gap in this indicator, much higher than the 25 that is given on average in the OECD.

The Secretary General of CELAC, Alicia Bárcena, pointed out that “digitization is today a basic and necessary good” but in Latin America – where internet access accounts for 14% of income, compared to 3% in Europe – 40% of families lack connection.

In this context, less than half of Latin Americans have sufficient experience in using computers and from other digital tools to perform basic professional tasks.

The Costa Rican president also wanted to draw attention to the dire consequences of this digital divide by noting that “in our present and in our future inequality is no longer in terms of income (…) but that the real inequality is in access” to education, health and knowledge.

Alvarado acknowledged in Latin America that the recovery “is going to be harder than that of the United States, that of China or that of Europe” for that reason and because the region does not have the same fiscal margins to carry out stimulus policies.

And next he added that if Latin America does not recover at the same rate, that too will have consequences in terms of migration, crime, of commercial exchanges and social instability, which will be felt in the rest of the world.

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