With the lockdown restrictions lifted in the second semester,
, International Monetary Fund (IMF) Western Hemisphere Director Alejandro Werner reported on Friday.
According to the IMF officer, downside risks remain prominent, however, and are particularly linked to domestic and global challenges in bringing the COVID-19 pandemic under control.
"Latin America and the Caribbean have become the new COVID-19 global epicenter. The human cost has been tragic, with over 100,000 lives lost. The economic toll has also been steep," he said.
Thus, the World Economic Outlook Update
now estimates the region to shrink by 9.4% in 2020, four percentage points worse than the April projection and the worst recession on record.
"A mild recovery to +3.7% is projected for 2021," he added.
The rates of COVID-19 infections and deaths per capita are approaching those in Europe and the United States, with the total number of cases accounting for about 25% of the worldwide total.
Against this backdrop, he recommended that countries be very cautious when considering reopening their economies and allow science and data to guide the process.
Indeed, he said many countries in the region have high levels of informality and low preparedness to handle new outbreaks, like a high occupancy of intensive care unit beds and low testing and tracing capacity.
Recent economic developments
Weaker economic data and more protracted COVID-19 outbreaks explain the significant downward revisions compared to the April forecasts.
The first quarter growth was worse than expected for most countries, while high frequency indicators —like industrial production, electricity consumption, retail sales, and employment— suggest that the decline in the second quarter will be deeper than projected in April.