Rain over wet in Latin America. Or rather: it either rains too much or too little. The South American continent is particularly vulnerable to climate change and floods and drought are exacerbating the economic situation of a region that has been on the brakes for more than a decade. This is what emerges from the annual report presented yesterday by ECLAC (Economic Commission for Latin America and the Caribbean), the regional body of the United Nations that studies the development of this continent.
In numbers, for 2023, ECLAC projects that all sub-regions will exhibit lower growth compared to 2022: South America would grow by 1.2% (3.7% in 2022), the group made up of Central America and Mexico 3.0% (3.4% in 2022), and the Caribbean (excluding Guyana) 4.2% (6.3% in 2022). Projections indicate that low economic dynamism in the region would remain. The continent’s regional gross domestic product is expected to grow by 1.5% in 2024, slightly lower than the 1.7% estimated for the current year. “The low growth of Latin America and the Caribbean can be aggravated by the negative effects of a worsening of climate shocks, if the investments in adaptation and mitigation to climate change that the countries require are not carried out,” he pointed out executive secretary of ECLAC, José Manuel Salazar-Xirinachs.
The study reports a very delicate picture: most countries are located in geographical areas particularly exposed to changes in hydrometeorological conditions with a greater incidence of droughts and heat waves, and also greater variability in the levels and patterns of precipitation or severe climatic phenomena. At the same time, the region exhibits a high dependence on economic activities that could be affected by climate change, such as agriculture, mining and tourism. “The macroeconomic damages of climate change could be very significant for the countries of the region. Estimates indicate that in 2050, the GDP of a group of six countries could be between 9% and 12% lower than that corresponding to a standard scenario”.
To offset these economic losses, exceptionally large additional investments of between 5.3% and 10.9% of GDP per year would be needed. Figures that are very difficult to achieve in the current situation, with high interest rates, high public debt and low tax revenues.
Apart from specific cases such as the hyperinflation of Argentina or the collapse of Venezuela, the bloc is going through a storm (economic, as well as climatic): employment growth is slowing, wages are falling, falling labor productivity, gender gaps persist and internal consumption slows down. And the commodity boom of the previous months, which instilled enthusiasm in some countries, seems to have evaporated.
