It rains it pours in Latin America. Or rather: either it rains too much or too little. The South American continent is especially vulnerable to climate change, and floods and drought are worsening 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 United Nations regional body that studies the development of this continent.
In numbers, by 2023, ECLAC projects that all the subregions 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 by 3, 0% (3.4% in 2022), and the Caribbean (not including Guyana) 4.2% (6.3% in 2022). Projections indicate that the low economic dynamism in the region would continue. The regional gross domestic product of the continent is expected to grow by 1.5% in 2024, slightly less than the estimated 1.7% for this year.
"The low growth of Latin America and the Caribbean can be aggravated by the negative effects of a worsening of climatic shocks, if the investments in adaptation and mitigation to climate change that the countries require are not made," said the executive secretary of ECLAC, José Manuel Salazar-Xirinachs.
The study relates a very delicate picture: most of the countries are located in geographical areas that are especially exposed to changes in hydrometeorological conditions with a higher incidence of droughts and heat waves, as well as greater variability in the levels and patterns of precipitation or severe weather events. 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 damage from 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% less than that corresponding to a standard scenario. To offset these economic losses, exceptionally large additional investment would be needed, between 5.3% and 10.9% of GDP per year. Figures that are very difficult to achieve in the current situation, with high interest rates, high public debt and low tax revenue.
Apart from specific cases such as hyperinflation in Argentina or the collapse of Venezuela, the bloc is going through a storm (economic, as well as climatic): employment growth slows, wages fall, labor productivity falls, gender gaps persist and domestic consumption slows down. And the commodity boom of the previous months, which buoyed some countries, seems to have faded.
