Everything Caribbean

Zero hour: Our region in the face of the pandemic


By Alicia Bárcena
Ibarra — Executive Secretary of ECLAC (United Nations’
Economic Commission for Latin America and the Caribbean)

Everything seems to be one gigantic mistake. We
console ourselves by saying that everything has happened as it should not have
happened. But it is we who are mistaken, not history. We must learn to look
reality in the face; if necessary, we must invent new words and new ideas for
these new realities that are challenging us. Thinking is the first obligation
of the intelligentsia, and in certain cases it is the only one.
Octavio Paz: The Labyrinth of Solitude

It is
true that history recounts the devastating impact of past pandemics, but none
of them broke out in such a populated world (with more than 7.7 billion people)
or such an interconnected one, and with a planet that is ailing
environmentally. This is the biggest human and health crisis we have ever
faced. That assertion must serve as our guiding principle if we are to approach
it effectively. It has, of course, profound economic implications, but the
center of attention, the focus of public policy decisions, must be on
safeguarding one of the most valuable global public goods in existence:
people’s health and well-being.

this in mind, it is fitting to mention that Latin America and the Caribbean
will be impacted via five main external channels: the decline of economic
activity in our principal trading partners, especially China; the fall in
prices for our commodities; the interruption of global and regional value chains;
the steep drop in demand for tourism services, which primarily affects the
Caribbean; and an increase in risk aversion and the worsening of global
financial conditions and capital outflows from the region, with the consequent
devaluation of our currencies.

onslaught of COVID-19 came at a bad time. Worldwide, 2019 marked the worst
performance in the last decade (2.5% growth in GDP). In the case of Latin
America and the Caribbean, this performance was even more dramatic. To find
worse growth levels than what the region recorded in the last seven years, one
must look back as far as seven decades.

Just a few months ago,
and after ending 2019 with poor regional growth of just 0.1%, ECLAC estimated
that 2020 would witness a modest rebound and the growth rate would reach 1.3%
of GDP. Today, a conservative estimate – based on data that is still in the
process of stabilizing – tells us that Latin America and the Caribbean will
record negative growth of -1.8% this year, with a probable downward bias.

The effects of this
crisis on our main trading partners portend a decline in the value of our
region’s exports that could reach a magnitude of -10.7%. This scenario entails
a significant increase in unemployment along with heightened labor market

The consequent effects of
negative growth and higher unemployment translate into an increase in poverty
and extreme poverty. If the base data is confirmed, in 2020 the number of poor
people would rise from 186 million currently to 220 million, and the quantity
of Latin American and Caribbean inhabitants who live in conditions of extreme
poverty would rise from 67.5 million to 90.8 million.

This crisis finds us with
fragmented health care systems and without universal coverage, where more than
47% of the population currently has no access to social security. A crisis that
is particularly vicious for the 58 million people over 65 years of age in our

The challenge is
enormous, and it demands that we renew our toolbox. Each country will have to
creatively explore and expand the framework of its possible responses,
recognizing that there are no known formulas, while also recognizing that there
are some imperative steps to be taken.

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In the current situation,
it cannot be overlooked that massive fiscal stimulus is needed to bolster
health services and protect income and jobs, among the numerous challenges at
hand. The provision of essential goods (medication, food, energy) cannot be
disrupted today, and universal access to testing for COVID-19 must be
guaranteed along with medical care for all those who need it. Providing our
health care systems with the necessary funds is an unavoidable imperative.

When we talk about
massive fiscal stimulus, we are also talking about financing the social
protection systems that care for the most vulnerable sectors. We are talking
about rolling out non-contributory programs such as direct cash transfers,
financing for unemployment insurance, and benefits for the underemployed and

Likewise, central banks
have to ensure liquidity so the production apparatus can guarantee its
continued functioning. These efforts must translate into support for companies
with zero-interest loans for paying wages. In addition, companies and
households must be aided by the postponement of loan, mortgage and rent
payments. Many interventions will be needed to ensure that the chain of
payments is not interrupted. Development banks should play a significant role
in this.

And, certainly,
multilateral financing bodies will have to consider new policies on
low-interest loans and offer relief and deferments on current debt servicing to
create fiscal space.

It is also urgent that
unilateral sanctions and blockades, imposed in the world and in our region, be
lifted, because they hamper entire populations’ access to goods and services
that are indispensable for fighting this sanitary challenge. Today,
humanitarian considerations come before any political differences. Health
cannot be held hostage to geopolitical quarrels.

This is a complex time,
and it comes as our planet is ailing. It is experiencing one of its worst
phases in environmental terms, with polluted oceans and rivers, devastated
forests, eroded soil, mass extinction of species, and altered climatic cycles.
This must be the time to reflect on the unsustainability of the extractivist
and unequal development model.

This new health crisis
has exposed the fragility of this globalization and of the development model on
which it was based. The breaking of supply chains, the decline in global
growth, and the performance of financial markets have exposed the global
vulnerability of our economies. In light of the evidence of this crisis, the
global community will have to face the fact that globalization did not work as
promised and it must be reformed.

The decoupling between
financial markets and the real economy’s flows must be contained and regulated.
International trade is not an inevitable driver of long-term growth without
policies for diversifying and transforming production. Inequalities, between countries
and within them, aggravate the fragility of the global system and must be
rolled back.

This pandemic has the
potential to transform the geopolitics of globalization, but it is also an
opportunity to survey the benefits of multilateral action and make room for
needed debate on a new, sustainable and egalitarian development model. Because,
“if necessary, we must invent new words and new ideas for these new
realities that are challenging us.”

The post Zero hour: Our region in the face of the pandemic appeared first on Antigua Observer Newspaper.

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