Will Latin America Be Poorer After Covid-19?

CARACAS, Venezuela, Tues. July 28, 2020 (Reuters) – Latin America will emerge from the COVID-19 pandemic with higher poverty rates as efforts to control the virus lead to spikes in unemployment and indebtedness, Inter-American Development Bank President Luis Alberto Moreno said in an interview.

Latin America, where economic growth has already been slowing in recent years, is expected to see an economic contraction of 8% to 10% in 2020 as a result of the coronavirus and associated quarantine measures, Moreno said.

The pandemic “will impoverish not only Latin Americans, (but also) the world in general, but clearly Latin America is going to be hit much harder because we are an emerging (market) region,” he said.

The IADB, which is Latin America’s largest regional lender, this year will approve nearly $20 billion dollars in loans.

Around $15 billion of those will go to governments to strengthen healthcare systems, he added.

‘NOTHING’ FOR VENEZUELA

Though the sharpest contraction in the region has been in Venezuela, Moreno said the IADB cannot provide any funding for the government of President Nicolas Maduro because his administration is in default on some $700 million in loans.

Venezuela has been in recession for six years and annualized inflation exceeds 3,500%, according to the opposition-run National Assembly, which calculates economic indicators due to delays in the release of official figures.

“There is absolutely nothing we can do for Venezuela,” Moreno said. “There’s no country in the history of humanity that has seen a contraction as deep as that of Venezuela without having had a war or a natural disaster or both.”

Moreno added that Venezuela’s vast oil reserves, as well as decades of infrastructure development thanks to oil income from previous years, means that it will have a better chance to turn its economy around after a change in government.

Venezuela’s information ministry did not immediately reply to a request for comment.

(Reporting by Vivian Sequera, Mayela Armas and Brian Ellsworth; Editing by Steve Orlofsky)