Latin America needs to transform its development models and diversify its production

Latin America and the Caribbean is plunged into a development crisis and it will not be able to transform its models to overcome it and advance in an integral and solid way while following the same strategies. Needs to transformative politics and bold that really move the needles of development, not gradual and timid changes, affirmed this Sunday the Economic Commission for the region (ECLAC).

According to ECLAC, Latin American and Caribbean countries have lost a decade of development and this year they face the effects of a cascading series of crises: climate, health, employment, social, education, food security, energy, and cost of living.

A study that the Commission will present this Monday in Buenos Aires during its biennial meeting explains that the combination of external and internal factors has reduced the capacity for economic growth and the generation of quality jobs and has hindered its fight against poverty and extreme poverty. “Their economic and social structures have weakened and they have entered into situations that reinforce the inertia of a weak economic performance”, states the document, which outlines a proposal for recovery and sustainable development in the current global and regional context.

The event in Buenos Aires will bring together high-ranking authorities from the region, as well as researchers, academics, civil society representatives and international officials, who will debate the situation and discuss the ECLAC publication.

New slowdown in 2023

The study recalls the low average economic growth rate of 0.6% per year registered in the region from 2014 to 2019, the historical contraction of 6.9% in 2020 and the recovery of 6.5% in 2021. For this year, ECLAC forecasts growth of 3.2% and expects a slowdown in 2023, when it would grow only 1.4%.

The document also refers to rising inflationwhich in June 2022 reached 8.4%, and the deterioration of the fiscal situation of the countries of the region, as a result of the measures taken to combat the worst moments of the COVID-19 crisis and its social consequences.

The pandemic brought more poverty

With regard to the social situation, he points out that it has also deteriorated, with considerable increases in poverty levels due to the pandemic and the economic recession that accompanied it.

For 2020, ECLAC calculated that the poverty and extreme poverty reached 33% and 13.1% of the population, respectively. By 2021, the incipient recovery of the economies translated into a very modest drop in poverty to 32.1% and a marginal but continuous increase in extreme poverty to 13.8%.

Need for new policies

“It is in this context that the countries of the region must adopt policies that enable sustainable growth, mitigate inflationary pressures, generate quality employment, and mitigate social costs along with reducing poverty and inequality. All of this poses serious challenges for political and governance systems and for the technical, operational and political capacities of public institutions,” warns ECLAC.

In its study, ECLAC proposes a series of drivers that can boost productive and structural transformation, as well as investment and job creation. Those drivers are the energy sectors; electromobility; circular economy; bioeconomy; health manufacturing industry; digital transformation; care economy; sustainable tourism; micro, small and medium enterprises; and social and solidarity economy.

The United Nations regional body stresses the urgency to act to recover investment and growthrecognizes the central role of the State in the design and execution of policies for the transformation of the development model and underlines the importance of advancing in the strengthening of public and private alliances.