UN claims Latin America's economic recovery will slow down due to new waves of Covid-19

Global economic recovery will slow down due to new waves of COVID-19 infections, labor market problems, and rising inflationary pressures, claimed the United Nations (UN) on Thursday.

Latin American and Caribbean countries face a harsh outlook for 2022 and 2023 as a result of slowing external economic growth, according to the UN’s World Economic Situation and Prospects (WESP) 2022 report.

In 2021, the world saw economic improvement that was driven by consumer spending and a rebound in investment, along with a trade of goods that surpassed pre-pandemic levels. However, growth slowed considerably at the end of the year, especially in China, the United States, and the European Union.

As a result of this slowdown, global production will be impacted. Global production is estimated to grow by only 4% in 2022 and 3.5% in 2023, after expanding to 5.5% in 2021, according to the report.

GDP growth for Latin America and the Caribbean is predicted at 2.2% this year, down from 6.5% in 2021, when economic activities recovered after the recession caused by the first wave of the pandemic.

The report claims unemployment rates will remain high in most countries in the region. This is because participation rates are lower than before the pandemic, while informal employment accounts for a large share of the jobs created during the recovery in 2021.

The groups most affected by the deterioration of the labor market are young people, women, and less-educated workers, according to the report. However, the study predicts that employment levels will remain well below pre-pandemic levels for at least the next two years.

The UN projections complement the forecast published by the Economic Commission for Latin America and the Caribbean (ECLAC) released on Wednesday, which highlighted the uncertainty between developed and developing countries.

ECLAC anticipated lower growth and global trade in 2022, as well as a less favorable external context, inflationary pressures, and episodes of exchange rate volatility. All of this will cause lower economic growth rates, which in turn will affect employment rates and increase the prices of basic goods such as food and energy, the projections forecasted.