The fate of the economy when society can return to normal is uncertain. / Photo: Rawpixel
LatinAmerican Post | Juliana Suárez
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Leer en español: ¿Qué pasará con la economía después del COVID-19?
The coronavirus and the result of the quarantine will leave high unemployment rates and great effects on the economy worldwide
Quarantined life will have economic repercussions that are already beginning to be seen and governments are trying to curb its impact with different strategies . Meanwhile, nations have been forced to improvise as they try to keep the health emergency from escalating. However, in a world where capitalism and consumerism prevail, facing an economy that is almost 100% stopped is a great risk.
For its part, Latin America faces this crisis having unstable economies, which means that it is likely that not only will unemployment increase, but that this will make millions of people part of the poverty rates, which are already high in most countries in the region. According to ECLAC, the UN Economic Commission for Latin America and the Caribbean, due to the coronavirus, a global recession is approaching that will lead to a decrease in GDP in the region.
This temporary "closure" of the economy has forced countries to focus on the regional and national. According to Alicia Bárcena, ECLAC executive secretary in an interview for the BBC, what is coming is not comparable to the 2008 economic crisis or any that Latin America has experienced.
It will be "much worse because we are facing a deep recession that will surely cost double digits in the next two quarters of the economy," she said. Before the crisis, ECLAC had estimated a growth of 1.3% in the region for this year, but now they are calculating a decrease of 1.8% . This would impact the daily life of millions of citizens of the countries, especially in aspects such as unemployment.
Industries such as hotels and tourism, including airlines, are the most affected since the main measure worldwide has been to stop travel to avoid further spread of the virus. Similarly, according to the McKinsey Global Report of the London Business School,the other sectors most affected by the coronavirus have been: hydrocarbons, automotive, consumer products, electronic products, and the entertainment and restaurant sector. Some of them will have the resilience capacity that will allow them to grow again once the crisis is over, while others will take longer to recover.
As countries and companies begin to adapt, the damage begins to be seen not only in the region but throughout the world. This damage will start at the company level, but from the beginning the workers and families of the community are the first to be affected. Likewise, the way of consumption is going to change due to both the uncertainty and the increase in unemployment.
One of the cases with the greatest impact in the region has been that of Venezuelan migrants, especially in Colombia. This is a country that would itself have problems with an economic crisis of this magnitude given the high rates of informal work and unemployment, but the massive exodus from Venezuela has left hundreds of thousands of Venezuelans living irregularly in the neighboring country.
Now, with the economic slowdown due to compulsory quarantine, these people have been some of the most affected since those who worked did so in informal settings that are not currently working. As such, many of them are at high risk of being on the side of the extreme poverty line, as they have no home, job or basic needs.
But this is not only happening in countries in Latin America, the world economic superpower, the United States, is also seeing the economic consequences in a health crisis that is just reaching its peak. In the country that has more than 550,000 cases and 22,000 fatalities, jobs are already beginning to be affected . Not only the collapse of the world's leading stock market, Wall Street, but the closings of some states have led to more than 10 million Americans losing their jobs. This high number has risen in just two weeks, exceeding estimates that it would affect between 4.5 and 5.5 million.
According to Bárcena, “there is an expectation that this crisis will be temporary, that it will last around six months. But the truth is that there are aspects of the economy that, indeed, are going to be very difficult to recover” . For this reason, once the crisis is over, it will be important to rethink the global as well as the regional economy, since at this time it depended on a large portion of exports and imports with the United States, China and the European Union, the three most affected by the Coronavirus. .