COVID-19: The World Bank's GDP forecasts for Latin America

The spread of coronavirus in Latin America will have a severe impact on the region’s economic performance this year, according to the World Bank.

The multilateral lender is projecting a 2020 GDP contraction of 4.6% for Latin America and the Caribbean (excluding Venezuela),

The region will see a recovery next year with growth of 2.6%, according to the World Bank. 

The COVID-19 pandemic is fueling a major supply shock, while demand from China and G7 countries is falling dramatically, affecting commodity exporters in South America and exporters of manufactured goods and services in Central America and the Caribbean, said the bank in a report. 

A collapse in tourism is severely impacting some countries in the Caribbean, it added. 

BNamericas takes a look at the country-specific details of some of the region’s major economies.

BRAZIL 

Starting this year economists were projecting an economic recovery for 2020, after an expansion of only 1.1% last year.

The World Bank now expects a recession of 5% this year for the Brazilian economy due to weak external demand, low oil prices and economic disruption from coronavirus-containment measures.

Brazil is a net oil exporter. 

"These shocks will reduce private consumption and may impact labor productivity, while unemployment is expected to rise," said the World Bank. 

MEXICO

The region’s second biggest economy is set to post a contraction of 6% this year, following a decline of 0.1% last year. 

"Key components of aggregate demand will suffer significant declines. Slower exports will only be mitigated in 2020 by an even sharper import compression," the World Bank said.

The bank sees the Mexican economy expanding 2.5% in both 2021 and 2022 due to the assumption of a rapid economic rebound in the US economy.

ARGENTINA

Argentina, which is in the midst of a sovereign debt restructuring, will see a recession of 5.2% this year, after a contraction of 2.2% in 2019, according to the World Bank. 

"Limited fiscal space is curbing the prospects for stimulus, which includes cash-transfers, wage subsidies to firms to avoid lay-offs and additional transfers to provinces and capital spending," said the bank, adding that unemployment, informality and poverty will continue to increase in Argentina. 

CHILE 

Despite the negative impact from last year’s social unrest, the Chilean economy is likely to be among the least affected in the region by the pandemic crisis. 

The World Bank forecasts a contraction of 3% this year, but expects a rapid and robust recovery next year with an economic expansion of 4.8%. 

"Chile’s massive counter-cyclical response will help cushion the crisis in 2020, and economic activity is expected to recover in the medium-term as the health crisis fades, and political consensus restores private confidence and contributes to a more equitable society," said the bank.