IMF sees 'lost decade' of no growth in Latin America due to pandemic

WASHINGTON (Reuters) - The International Monetary Fund on Thursday said the economic fallout of the coronavirus pandemic, combined with other problems in recent years, meant Latin America and the Caribbean would likely see “no growth” in the decade from 2015 to 2025.

FILE PHOTO: International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S., as IMF Managing Director Christine Lagarde meets with Argentine Treasury Minister Nicolas Dujovne September 4, 2018. REUTERS/Yuri Gripas

Alejandro Werner, who heads the IMF’s Western Hemisphere department, said the global lender was racing to process 16 requests for emergency assistance, about half of which were from Caribbean nations devastated by a halt in tourism.

Other countries, including Barbados and Honduras, had asked about traditional IMF programs or extensions of existing financing arrangements, he said.

In its 2020 World Economic Outlook, the IMF this week forecast the economy of Latin America, where outbreaks have continued to rise, is likely to contract 5.2%.

Werner told reporters in a videoconference briefing that countries in the region were facing the worst economic recession since they started producing national accounts statistics in the 1950s.

Given the dramatic contraction forecast for this year, and the impact of policies aimed at containing the pandemic, a sharp recovery was expected in 2021, as long as the pandemic could be contained, he said.

But that would not be sufficient to compensate for the current crisis, coupled with other events and problems in recent years.

“It’s not only this shock; it’s the cumulative negative shock that the region will have gone through in the decade going from 2015 and 2025,” Werner said. “On average, our expectation is that it is highly likely that in the decade from 2015 to 2025 there will be no growth.”

While individual countries would see some growth over the decade, the region as a whole would not, he added.

Werner said the Fund would analyze a $70 billion debt restructuring proposal unveiled by Argentina on Thursday, and was working with Argentine authorities to schedule an Article IV consultation.

The Fund was processing Ecuador’s request for emergency aid, and would send it to the executive board for approval as soon as possible, he said.

Werner said the IMF was concerned about the possibility that the pandemic could spark social unrest in Latin America, which had already seen some protests last year.

To guard against potential disruptions, Latin American countries should be attentive to societal fault lines in structuring their responses to the pandemic, he said.

Reporting by Andrea Shalal and David Lawder; Editing by Sandra Maler and Lincoln Feast.