Vaccination processes and the United States will be key factors for economic recovery in Latin America

This was indicated in a meeting with representatives of the Central Banks of American and European countries.

This Monday, the central banks of several countries met with international institutions to analyze the impact of the pandemic and assured that the economic policy of the United States and the vaccination process will mark the recovery for Latin America.

Representatives of the central banks of Mexico, Colombia, Argentina, Brazil, Spain and Portugal were present at the meeting.

The banks shared the lessons learned from economic management in the toughest months of the health crisis and highlighted the role that the US economy will play in Latin America while celebrating the “quick” reaction of international financing institutions.

Vaccination, something key

Several of the participants in the meeting, which is part of the events prior to the XXVII Ibero-American Summit on April 21, associated the date of economic recovery with the vaccination process that each country can carry out.

“The new challenge is the recovery of economic activity, which will be heterogeneous and will be driven by vaccination and the spending supports that different economies have put in place,” assumed the governor of the Bank of Mexico, Alejandro Díaz de León.

For his Argentine counterpart, Miguel Ángel Pesce, the biggest current problem is not the economic situation “but the distribution of vaccines”: “it will not be the last time that this phenomenon occurs and it would be good if health systems could give an appropriate response.”

The general manager of the Bank of the Republic of Colombia, Leonardo Villar, pointed out that the recovery of the Colombian economy, to levels similar to those it had before the pandemic, will not occur until the end of next year.

“We will achieve full recovery of these levels of activity in principle by mid or late 2022,” he said and pointed out that “the strongly expansionary monetary stance compatible with the balance of risks we have in an uncertain world” contributes to the economic reactivation.

Multilateralism in Latin America

The Ibero-American Secretary General, Rebeca Grynspan, called for “more international cooperation” to get out of the crisis as well as making “increasing” use of “innovative monetary policy” instruments.

The governor of the Bank of Spain, Pablo Hernández de Cos, defended the importance of international cooperation, and assured that it is time to give a “new boost” to multilateralism “to strengthen the global economic recovery.”

At the same time, he acknowledged that “we find ourselves in a moment with chiaroscuro,” where hope for the progressive vaccination of the population is mixed with certain elements of uncertainty.

The governor of the Bank of Portugal, Mário Centeno, also opted to strengthen multilateralism between Europe and Latin America as a result of the crisis derived from the pandemic, generating “asymmetries” that, he said, everyone suffers and will only overcome in a better way by being joined.

“Today we confront an asymmetry that is common to all economies because it is associated with the restrictions that the pandemic imposed on us. We must resume the convergence process and recover multilateralism,” he stated.

For his part, the president of the Central Bank of Brazil, Roberto Campos Neto, called for a “greater interaction” between the issuing institutes of Ibero-America to promote digital currencies and advance the process of technological innovation in the financial sector, accelerated by the pandemic.

“I think it is very important for Central Banks to talk more and have greater interaction about the digital currency project,” said Campos Neto.

The United States factor

The general manager of the Bank for International Settlements, Agustín Carstens, recalled that the United States' approval of stimulus plans for the economy "helped stabilize the markets" and opened "a lot of room" for Latin America "to act."

“The macro response in Latin America was initially positive, it was useful because there were policy spaces and the monetary policy of the United States opened many spaces to act,” he analyzed.

The chief economist of the World Bank group, Carmen Reinhart, positively valued the speed with which the suspension of debt payments was carried out last year, although she pointed out that if the participation of the public and private sectors “had been complete, the scale of the "The amount that countries could have saved would have been much greater."

The director of the Latin American initiative of the Center for Global Development, Liliana Rojas-Suárez, insisted on the need for payment postponements not to extend beyond the pandemic so as not to burden the region's economic system.

Along these lines, he considered it more useful to grant direct aid to small and medium-sized businesses: “if governments want to help business owners, they should encourage people not to help companies that are going bankrupt.”