Even so, it is worth highlighting the data from a recent report by the Center for Production Studies (CEP), which reflected that in August 2021 there were nine countries in the region whose economic activity was greater than that of February 2020, before the pandemic. These are, ordered from highest to lowest recovery: Ecuador, Honduras, Chile, Guatemala, Costa Rica, Dominican Republic, Peru, Colombia and Argentina.
At the same time, the World Bank economist also highlighted that the coronavirus shock was regressive, which means that it had a greater impact on the poor sectors. This occurs, according to the official, due to the difficulties to regain employment in the most precarious segments of the population and due to the acceleration of inflation, among other things.
Regarding debt, Reinhart highlighted the liabilities of some countries such as Argentina as worrisome, although he does not envision a scenario similar to that of 1982, when the Fed relaxed its monetary policy in a context of 14% annual inflation in the United States, and unleashed the Latin American debt crisis.
Regarding the Argentine debt with the IMF, he projected that there will be an agreement but clarified that it is still “very premature” to predict the details of it and that there have already been cases of default with the institution. “Peru was in default with the Fund also during its previous crisis and more recently, in 2015, Greece was in default. It lasted only a couple of weeks,” he recalled.
On the other hand, the Vice President of the World Bank highlighted as a risk the financial situation of private companies since the increase in interest rates could cause greater difficulties for the repayment of debts, and this could also become a problem for the public sector, in case of a rescue of the firms.
Source From: Ambito
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