In early 2022, Covid-19 and its economic and social consequences continue to pose a threat across the world. The pandemic has left a legacy of deaths, unemployment, greater inequality and poverty. Governments face the challenge of maintaining a balance between their primary obligation to preserve lives and the need to safeguard their economies.
It was also a test of resilience, as many had to diligently adjust their strategies and measures to respond to the dynamics of changing and uncertain circumstances.
In the case of Latin America and the pandemic, it is important to highlight the differences between countries: the diversity of economic and social conditions; the different approaches and policies with which each faced the crisis, including the capacity and efficiency of their immunization programs.
Broadly speaking, the pandemic hit Latin America in a complex regional context, in which structural economic and social deficiencies have not been resolved. Some countries in the region already had low levels of trust in public institutions, citizens’ dissatisfaction with the quality and coverage of public services, high levels of inequality and informal employment, social protests and acute polarization further exacerbated by social networks.
Furthermore, while there were signs of an economic recovery towards the end of 2021, inflation, devaluation of local currencies and fiscal deficits will make the recovery more complex. According to data from the International Monetary Fund, GDP recovered by 6.3%, on average, in 2021. A more moderate growth of 3% is estimated in 2022, not reaching pre-pandemic levels.
The World Economic Forum’s 2022 Global Risks Report indicates that 16% of global experts and leaders surveyed are optimistic about the outlook for the world and that only 11% believe there will be an accelerated recovery from the pandemic. The vast majority believe that a degree of uncertainty, volatility and divergence will persist.
As far as Latin America is concerned, according to the executive opinion survey carried out in 18 countries in the region, the greatest effects of Covid-19 on social issues are represented by unemployment, livelihood crises and an evident erosion of social cohesion.
When it comes to environmental issues, extreme weather and reversal of climate action, along with loss of biodiversity, rank among the most potentially serious risks for the region over the next decade.
On the economic front, there are concerns among respondents about a prolonged paralysis, debt crises, inflation, commodity price volatility and the collapse of social security systems. Government stimulus packages were vital to protecting people’s incomes, securing their livelihoods, preserving jobs and keeping businesses afloat, but the public debt burden has increased. Public budgets will remain tight after the pandemic, making it clear that greater public-private collaboration is critical.
Regarding connectivity, digital inequality is seen as an imminent threat to the world, as more than 3 billion people remain offline. If not addressed, the gap can seriously widen not only between developed and developing economies, but also within countries.
However, it should also be recognized that some countries and industries have been able to quickly access and seamlessly adapt to new forms of digital interaction and remote work, which are likely to remain. This digital leap and greater reliance on digital systems also leads to greater vulnerability, so rigorous cybersecurity plans must be foreseen.
Finally, the “collapse of the State”, the proliferation of illicit economic activities, geo-economic clashes and the geopoliticization of strategic resources also emerge as critical concerns in the research, the high regional concern with the deterioration of democracies and the serious phenomenon of migrations.
While pressing domestic challenges require immediate attention, the pandemic and its socio-economic consequences have once again demonstrated that global risks do not respect borders or political divergences, and that shared threats require a coordinated global response. Latin America cannot be thought of in isolation from the facts and trends that prevail in the rest of the world. On the contrary, it is evident the need to insert ourselves more into the global context, where the region has been losing prominence.
There are certainly some positives, and important opportunities have also emerged. Just as the growing recognition of Latin American startups and innovative unicorns has recently attracted significant investment flows, our region — endowed with vast natural resources and valuable human capital — must be at the forefront of emerging opportunities in terms of energy transition, markets and green jobs. , modern infrastructure and the preparation of new generations with technological skills and competences aligned with the employment opportunities of the future.
Ignoring the potential risks outlined will not prevent them from occurring, but we must respond responsibly and drive the integration of our region, putting aside ideological divisions and better coordinating to advance innovative solutions that address structural problems.
We must promote greater productivity with a long-term vision to provide certainty, at the national and, we hope, regional level, with a formula that integrates traditional socio-economic indicators with solutions in terms of resilience and inclusion, as well as responses to environmental challenges.
To a large extent, the potential for a better recovery in Latin America depends on knowing how to apply lessons learned and on the coordinated engagement of leaders from all sectors. May the social and economic wounds and scars left by the pandemic serve as a reminder to put aside internal divisions, ideological differences or historical frictions and rivalries, and allow us to chart a pragmatic agenda that ensures the next decade is no longer a lost decade.
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