World Bank projects that the Colombian economy will expand by 4.4%

The World Bank published on April 7 the forecast of economic growth for Latin America and assured that the region is on the way to a recovery from the covid-19 crisis, although the consequences of the pandemic persist and the need for dynamic, inclusive and sustainable growth is increasingly urgent.

After a 6.9% rebound in 2021, the region's GDP is expected to grow by 2.3% this year and an additional 2.2% in 2023, enabling most countries to reverse GDP losses that occurred during the pandemic crisis.

On the countries, the World Bank said it expects Brazil to grow by 0.7%; Argentina, 3.6%; Peru, 3.4%; Ecuador, 4.3%; Chile, 1.9%; Bolivia, 3.9%; Uruguay, 3.3%; and Paraguay, 1.5%. For its part, the international organization projected that Colombia's economy will grow by only 4.4%.

On the positive side, the vaccination process has become widespread in the region, companies are hiring again and schools are reopening their doors.

However, the long-term consequences of the crisis persist and need attention. The regional poverty rate rose to 27.5 per cent in 2021 and remains above its pre-pandemic level of 25.6 per cent, while learning losses could result in a 10 per cent reduction in the future income of millions of young people of school age.

To prevent the return of the low growth rates of the 2010s, the countries of the region must carry out a series of long-delayed structural reforms and take advantage of the opportunities offered by an increasingly green world economy.

“We are in a global environment of great uncertainty, which could have an impact on post-pandemic recovery. In the long term, however, the challenges of climate change will become even more pressing, requiring us to urgently move towards a greener, more inclusive and productivity-boosting growth agenda,” said Carlos Felipe Jaramillo, World Bank Vice President for Latin America and the Caribbean.

According to the report, it is imperative to implement a series of pro-growth reforms in infrastructure, education and innovation, and the most important investments must be financed through more efficient spending and higher tax revenues. But these much-needed reforms must respond to the major events that are shaping the world economy, including climate change.

Over the past twenty years, the report highlights, Latin American and Caribbean countries lost the equivalent of 1.7 per cent of their annual GDP to climate-related disasters, while some 5.8 million people could fall into extreme poverty in the region by 2030. Agriculture is likely to be seriously impacted, with a reduction in crop yields in almost all countries, while the stability of power generation will be affected by changes in the hydrological cycle.

“LAC enjoys tremendous green comparative advantages, which give it the opportunity to generate new industries and exports. It has enormous potential in renewable energy, large reserves of lithium and copper — used in green technologies — and great natural capital, all of which are increasingly valued in a world where global warming and energy security are taking center stage,” said William Maloney, chief economist at the World Bank for the Americas Latin America and the Caribbean.

“However, adapting to climate change and taking advantage of these opportunities to grow in a diversified and sustainable way will require improvements in the regional capacity to identify, adapt and implement new technologies,” the expert concluded.

KEEP READING: