Latin America is heading into “a deep recession” in 2020, with an expected drop in the region’s GDP of 1.8 to 4.0 percent due to the coronavirus pandemic, the U.N. economic commission for the region said Friday.
“We are at the beginning of a profound recession. We’re faced with the largest fall in growth that the region has had,” said Alicia Barcena, executive secretary of the U.N. Economic Commission for Latin America and the Caribbean (CEPAL).
Latin America was already struggling economically, with feeble growth of just 0.1 percent in 2019.
As with other parts of the world, the region’s main stock markets have suffered drastic losses as the virus crisis has escalated, and several currencies have plunged in value against the U.S. dollar.
A reduction in economic activity due to lockdowns imposed to combat the spread of the virus, a drop in the value of raw materials and the blow to tourism have all contributed to the bleak outlook.
Barcena said the best-case projection takes into account only the drop in economic activity with China, the region’s largest trading partner.
But if a drop in trade with the United States and European Union is also factored into the calculation, then a 3-4 percent contraction is expected.