The Caribbean could face the worst economic contraction in its history due to the fallout from the novel coronavirus (COVID-19) pandemic, according to new report.
“Assessing the Effects of COVID-19 to Plan the Recovery”, a new report published by the Economic Commission for Latin America and the Caribbean (ECLAC), has warned that the pandemic will herald a projected -5.3 percent drop in activity this year.
A contraction of this magnitude would mean going back to the Great Depression in 1930, when there was a -5.0 percent drop, or 1914, when growth plummeted -4.9 percent.
“The effects of COVID-19 will cause the biggest recession that the region has suffered since 1914 and 1930,” said ECLAC Executive Director Alicia Bárcena during a virtual press conference from ECLAC headquarters in Santiago, Chile.
“A sharp increase in unemployment is forecast, with negative effects on poverty and inequality.”
The report is ECLAC’s second study in tracking the economic and social effects of the coronavirus crisis in Latin American and Caribbean countries. The first was issued earlier in April.
Prior to the pandemic, the UN said the region had reported nearly seven years of low growth, averaging less than 0.5 percent.
The impacts of COVID-19 include a reduction in international trade, falling commodity prices, lower demand for tourism services and a drop in remittances, sent home from workers abroad, the U.N. said.