The only way to stop the pandemic and revitalize the economy is together
Juan E. Notaro
FONPLATA Executive President
As governments in the region start taking action to get the economy back on track, the size of the challenges we shall face in the coming months becomes more visible.
Latin America will have to face economic standstill due to quarantine and lockdown, medium- and long-term changes in some activities to comply with prevention measures, and a possible drop in the commodities demand by the more developed economies.
As a consequence, growth is expected to drop between -1.8 and -5.5%, according to the Inter-American Development Bank (IDB). “A shock of historic significance”, stated Eric Parrado, recently appointed Chief Economist of the IDB.
In this scenario, the logical question is: are we prepared? In fact, and despite the unpredictability of the pandemic and its consequences, we could be better prepared. However, I believe that there are reasons to be confident in our ability to overcome the challenge.
The first one is that we have done this before. That is, the regional economy has faced crises throughout history for different reasons. We have learned a lot from them, to the point that several Latin-American countries, and especially the ones in South America, have been among the most stable or fastest growing economies in the world in recent years. Also, there are already positive signals in demand and prices for food-exporting countries, particularly because of China’s gradual return to the market.
The second one is that this crisis should prompt us to strengthen the integration process among nations, increase its efficiency, and move towards strategic alliances to promote investment, as well as the development of value chains and intra-regional trade.
The third is the awareness of the need for coordinated action. Most countries have taken actions to provide immediate health care, focus on increased investment in science and technology, protect the unemployed, and announce medium-term economic packages to recover economies from the consequences of the pandemic.
There is also simultaneous action taken by credit agencies (IMF, World Bank, IDB, CAF, FONPLATA, among others) to help mitigate the social and economic impact of coronavirus with credit instruments and other mechanisms to ensure that countries have the funds they need as soon as possible.
We must deepen this process. Even if the economic situation of each country was different when reached by the pandemic, this is the moment to enhance our dialogue and cooperation and, above all, to deepen the integration schemes and improve their institutions to be more effective in reaching results, and, above all, with a sense of solidarity.
In the case of FONPLATA, as I referred in my previous article, we keep an ongoing interaction with our member countries, providing support in health care, guarantees and credit to micro and small enterprises, transport and logistics, and urban social infrastructure, key factors in a medium-term strategy to boost jobs, and recover demand and business dynamism after the pandemic.
In this regard, we cannot forget FONPLATA's mandate since its foundation that goes hand-in-hand with integration: the development of the most deprived areas – urban and rural – and the border regions. This is the time to pay special attention to vulnerable populations in those places.
What we need to do now is to see how each international agency and government, from their own area of expertise, can contribute to this joint effort with two main goals: to stop the pandemic and to reactivate the economy.
We will do our best to fulfill this task and I strongly believe that, as a result, Latin America will not only be more prosperous and stable, but also better prepared for future crises, more equitable and united.
Text originally published in the monthly column of Juan E. Notaro in the Huffington Post.