World Bank sees plunge in Latin America, Caribbean economies

MEXICO CITY (AP) – The new coronavirus pandemic could send economies tumbling by 4.6 per cent this year across Latin America and the Caribbean, forcing governments to take ownership stakes in struggling major businesses, according to a World Bank report issued last Sunday.

The bank’s Latin America and Caribbean branch projected that gross domestic product for the region will fall by 4.6 per cent before rebounding by 2.6 per cent next year. Venezuela, which has already seen a dire economic plunge, was not included in the prediction.

That’s even more dramatic than the contraction of 1.8 per cent to four per cent projected earlier this month by the UN’s Economic Commission for Latin America and the Caribbean.

The disease has slammed tourism, demand for the region’s products and crucial remittances sent home by migrants in the US and elsewhere.

The bank said governments will need to rapidly ramp up existing social assistance programmes while also supporting financial sector institutions and key sources of employment.

“To support jobs and firms, governments may need to take ownership stakes in strategically important firms. To avert a financial crisis, they may need to recapitalise banks and absorb non-performing assets.”