By: Adriana Bazán Fuster
December 1st, 2021
The new COVID-19 variant, Omicron, has created a wave of sanitary measures and travel restrictions that will very possibly impact the economic growth of countries into the first quarter of next year. The United States, the United Kingdom, the European Union have taken severe measures that will have a domino effect on the developing countries, especially in Latin America and the Caribbean (LAC).
The availability of vaccines is still far from being reality in many countries in LAC. According to data from ECLAC, the region has a 30% vaccination rate with complete scheme, even though countries like Chile and Uruguay are close to 70%, most countries still have not reached the initial goal of a, minimum coverage of 20%.
With a slightly uncertain reality on the global health perspective, the LAC region continues to fight the social and economic inequality that the COVID-19 crisis has left. Even though several countries in the region have established measures to combat the health crisis, the numbers speak for themselves.
From May to September (2021), countries in LAC spent, on average, 0.89% of their GDP on rescue and recovery measures, while advanced economies spent just over 0.53% of their GDP in the same period. This stems from a global slowdown in post-COVID19 spending.
From May to September, only The Bahamas, Grenada, Saint Vincent, and the Grenadines, Perú and Bolivia invested largely in recovery spending (long-term), while Suriname, México and the Dominican Republic made new financial commitments for their recovery spending (long-term). However, few countries have taken a step towards rethinking their development models with a sustainable recovery lens.
During the same period, only the Dominican Republic, Brazil and Argentina made commitments to adopt and finance measures of research and development for clean energies, natural infrastructure, green spaces and electromobility. In this case, Brazil was the country with the biggest financial commitment, while the Dominican Republic committed the largest percentage of its GDP on environmentally-sustainable measures.
Undoubtedly, these environmentally-sustainable measures will bring multiplier effects such as the creation of jobs, the reduction of emissions, the increase in resilience, and ultimately, economic growth. However, these measures continue being squalid and isolated in comparison to investment of countries in LAC to the unsustainable that is the investment in fossil fuels. The cumulative environmentally-negative spending (USD 6.83 billion) continues to be well above the cumulative environmentally-sustainable spending (USD 2.22 billion); revealing the imbalance of countries in prioritizing environmentally-sustainable recovery measures.
This is reflected in the numbers, much of the new environmentally-sustainable spending announced in the region has been counteracted by new environmentally-negative spending from Bolivia, Panama, and the Dominican Republic.
Bolivia committed USD 10 million to rescue the airline industry; Panamá approved a credit of USD 20 million to the Maritime Authority to support the tourism sector, specifically cruises; the Dominican Republic committed USD 130 million to maintain the prices of gasoline, diesel, kerosene, and petroleum.
According to Figure 2, the figures are impressive and overwhelming, the average of countries in LAC are not investing in environmentally-sustainable recovery measures. The advanced economies invest around 3.5% of their GDP on average in recovery measures and 0.55% of their GDP environmentally-sustainable recovery measures while in most countries in LAC, that investment in green recovery measures is null or imperceptible.
Before humans live an unstoppable crisis, first health and then environmental, it is imperative to change strategy and rethink economic development of our countries. For more information on how countries in LAC can prioritize a sustainable economic recovery, visit the UNEP – University of Oxford report: Is the COVID-19 economic recovery building a sustainable future? A snapshot from Latin America and the Caribbean, and the platform recuperacionverde.com where there is a compilation of macroeconomic and public policy studies that incorporate climate-oriented, environmentally-sustainable and socially-just measures in the core of LAC economic recovery.
The “Recuperación Verde” initiative is developed thanks to the financial support of the European Union through the EUROCLIMA+ Programme. For more information on the Programme, please visit https://euroclimaplus.org/