Snapshot: How the World Bank expects LatAm's big 6 economies to fare in 2021

The World Bank has urged countries to “move decisively” to tame the COVID-19 pandemic and implement investment-enhancing reforms.

“To overcome the impacts of the pandemic and counter the investment headwind, there needs to be a major push to improve business environments, increase labor and product market flexibility, and strengthen transparency and governance,” said World Bank Group president David Malpass.

The call comes in a statement announcing the publication of the bank’s 2021 Global Economic Prospects report, which estimates that Latin America will grow below the 4% expansion forecast for the global economy.

“Regional economic activity is projected to grow by 3.7% in 2021 as pandemic mitigation measures are relaxed, a vaccine is rolled out, key commodity prices firm, and external conditions improve,” the report said.

“Nevertheless, the rebound will be muted and follows a decade of sluggish growth. In a downside scenario in which vaccine rollout is delayed, with knock-on economic effects, growth could be a more anemic 1.9%.”

The 3.7% estimate for 2021 is nevertheless 0.9 percent points higher than the June 2020 projection. The bank estimates the region’s economy contracted 6.9% last year.

The report said: "Deterioration of investor sentiment is a serious risk to the outlook. While fiscal stimulus has been needed to cushion the blow of the pandemic, fiscal space has largely been depleted and government debt has risen sharply. Creditworthiness has fallen across the region. The combination of entrenched inequality of opportunity, a worsening perception of government effectiveness, and rising poverty could reignite social unrest."

WORLD BANK’S 2021 GDP FORECASTS FOR SIX BIGGEST ECONOMIES IN LATAM

No. 1

Brazil: 3.0%

No. 2

Mexico: 3.7%

No. 3

Argentina: 4.9% 

No. 4

Colombia: 4.9%

No. 5

Chile: 4.2%

No. 6

Peru: 7.6%