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ECLAC estimates 2.7 million Latin American companies can close due to coronavirus

Christian Fernsby ▼ | July 3, 2020
Some 2.7 million companies could close, leaving more than eight and a half million workers jobless due to the coronavirus pandemic, Alicia Bárcena, ECLAC Executive Secretary, estimated.
Alicia Bárcena
ECLAC   Alicia Bárcena
The senior official of the Economic Commission for Latin America and the Caribbean (ECLAC) added that more than a third of formal employees and a quarter of the region's gross domestic product (GDP) are generated in sectors heavily hit by the economic crisis exacerbated by the pandemic.

Topics: Latin America

Bárcena presented a new study by that body entitled 'Sectors and companies against Covid-19: emergency and reactivation', which analyzes the difficult situation taking into account the magnitude -strong, significant or moderate- that the health emergency will have on the entities and sectors.

Bárcena explained that the economic crisis derived from the pandemic has greatly damaged all those activities characterized by the concentration of people, from tourism to culture, but also on the industrial sectors of greater technological dynamism and, therefore, will deepen the structural problems of the economies of the region.

This implies that if adequate policies are not implemented to strengthen these branches, a regression of the economies towards primary activities is likely to occur, he warned.

Faced with this situation, she said, ECLAC emphasizes the need to provide a large-scale response to avoid the destruction of productive capacities, with four sets of measures that include extending the terms and scope of liquidity and financing lines for companies.

Also, that the states help co-finance the companies' payroll for six months to avoid the destruction of capacities; make direct transfers to self-employed workers, and support large companies in strategic sectors that are seriously affected by the crisis.

On the latter, she highlighted their importance since they provide 39 percent of formal employment and more than 90 of exports.

She recalled that these proposals complement those already announced by ECLAC to provide an emergency basic income equivalent to the value of a regional poverty line for six months to the entire population of Latin America and the Caribbean in a situation of poverty, and a bonus against hunger equivalent to 70 of the extreme poverty line

Barcenas pointed out that the first two seek to protect vulnerable sectors and reduce the drop in demand that impacts businesses and employment, while the support measures for companies save jobs, preventing poverty increase and extreme poverty, thus reducing the cost of social outreach measures.

Lastly, the Executive Secretary of ECLAC underscored that the Covid-19 crisis highlights the need to move towards a new development model and with 'policies that allow for the emergency and implement a strategy to overcome the structural weaknesses of the economies and societies '.