The latest report from the World Bank, titled “New approaches to closing the Fiscal Gap,” notes that although the overall economy needs to rebuild to prevent a new cycle of low growth, the economies in Latin America and the Caribbean have returned to their pre-pandemic levels and the region has regained some sense of normality.
The analysis highlights a higher-than-predicted regional growth rate of 3% for 2022, largely as a result of rising commodity prices. Nevertheless, the economy of the region will be impacted by the global uncertainty brought on by the Ukraine war, the rise in interest rates in rich nations, and the ongoing inflationary pressures.
In this context, reduced growth rates of 1,6% and 2,3% are projected for 2023 and 2024, which are comparable to the decade’s low levels and insufficient to make considerable progress in alleviating poverty.
”Most economies have recovered their pre-pandemic levels, but it is not sufficient. Countries in the region have the opportunity to rebuild better conditions following the crisis and achieving societies that are fairer and inclusive,“ according to Carlos Felipe Jaramillo, World Bank vice-president for Latin America and the Caribbean.
Governments must address structural costs, the years of education missed, vaccines not administered, and the impact of food insufficiency, which the recovery of GDPs conceals, in addition to making the required reforms and investments to boost growth.
The report continues by making the case that the area is in a good position to reach its development forecast. With the exception of the Caribbean, employment has nearly returned to its pre-pandemic level, schools have reopened, and the high rate of Covid19 vaccination has aided in a return to normalcy.
However, there are still certain pandemic-related effects that need to be dealt with. Even though the poverty rate decreased from 30% in 2021 to 28.5 percent in 2022, it is still high. To help restart growth and to lessen the rise in inequality in the area, it is also critically necessary to address the long-term consequences of the health and education problems.
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