Biodiversity and green energy as drivers of economic growth

UNITED NATIONS —

A recent World Bank report notes that economic recovery after the pandemic is progressing slowly and unevenly in Latin America and the Caribbean, despite efforts made by governments, the private sector and civil society in areas such as education, inclusion and adaptation to climate change.

The report notes that although the region’s gross domestic product (GDP) has managed to recover from the impact of the health crisis, economic growth remains the lowest among all regions in the world. For 2024, average growth is expected to be 1.6%, affected by global factors such as falling commodity prices, high interest rates in G7 countries and an unstable economic recovery in China and Europe.

In terms of employment, the region has managed to return to pre-pandemic levels, even in the case of women. However, real wages remain stagnant, particularly among workers with lower levels of education and older adults, who show a significant delay in recovery. In addition, informal employment remains at levels similar to those of 2019.

The World Bank also highlights that household income losses resulting from the pandemic have not yet been fully recovered, particularly affecting the middle class. Poverty has increased, with an average rate of 30.3%, while inequality, measured by the Gini coefficient, has registered a slight decrease, mainly attributed to the drop in income in the highest income sectors.

In terms of inflation, most countries in the region have made progress in controlling it, with an average projected rate of 3.5%, lower than the 5.7% recorded by OECD countries, which represents progress compared to the global inflationary situation.

Opportunities in the Latin American region

The challenges facing the Latin American and Caribbean region have also been addressed this week at the United Nations General Assembly, which is being held these days in New York, while the need to promote policies that protect the environment and strengthen green energy industries has been put on the table.

“I think we are in a particularly interesting situation right now because of biodiversity and the transition to green energy,” explained Alejandra Botero, manager of impact planning and development at the Development Bank of Latin America (CAF).

According to her, the fact that the region has “40% of the world’s biodiversity, that most of our energy matrix is ​​green, that we have 60% of the world’s lithium reserves and 40% of copper production” are “key factors for the global transition.”

“They open a window for us, if we really take advantage of them, to boost this growth,” Botero said during a speech at the Concordia forum, which took place these days in New York City as a parallel event to the General Assembly with the participation of prominent figures from all sectors.

He also pointed out that another advantage, in terms of stability, for attracting foreign investment is that the region “does not have an ongoing war” and there is “relative macroeconomic stability.”

Challenges in the region

However, he admitted that Latin America and the Caribbean have to face some challenges “such as poverty and lack of growth.”

“We have made great progress in terms of poverty. At the beginning of 2000, poverty affected one in two Latin Americans and that poverty has now stagnated. We have not managed to reduce it significantly and, in fact, it has increased slightly,” he added, arguing that the COVID-19 pandemic contributed to worsening the situation.

“From the perspective of a development bank, we think: we are not growing, we still have high poverty, we are one of the most unequal countries in the world, but we have an opportunity in terms of the climate transition and in terms of the diverse and biodiverse resources that we possess,” he argued.

Some projects that are being developed

Botero celebrated that the CAF, which has the support of 23 member countries in the region, has managed to obtain a capitalization of more than 7 billion dollars to develop projects to boost the economy in these areas of the American continent.

“We carry out many infrastructure, water and sanitation projects, as well as social projects. But we are also entering into more innovative areas, such as carrying out a telemedicine project in El Salvador for the first time,” explained the CAF director.

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