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Coronavirus Pandemic to Shrink Latin Economies

A worker prunes dragon fruit plants at La Voluntad de Dios farm in El Progreso, Ecuador, March 6, 2020.

The coronavirus pandemic could send Latin American and Caribbean economies plunging nearly 5% this year, the World Bank predicts.

The bank’s acting vice president for Latin America, Humberto Lopez, said the sharp drop in these economies may force Latin governments to partially take over some businesses to keep them afloat.

“To support jobs and firms, governments may need to take ownership stakes in strategically important firms. To avert a financial crisis, they may need to recapitalize banks and absorb nonperforming assets,” Lopez said in a new World Bank report.

He added that the bank will have to step in to help “limit the damage and lay the groundwork for recovery as fast as possible.”

The report urges Latin governments to be “transparent and professional” in helping beleaguered businesses to avoid any signs of corruption and possible future punishment.

The World Bank forecast of a 4.6% contraction in Latin economies is much more dire than an earlier U.N. prediction of a shrinkage of between 1.8 to 4%.

The World Bank report said that although Latin economies may fall hard this year because of the pandemic, it predicts a 2.6% recovery by 2021.

Latin and Caribbean countries that rely on tourism and foreign dollars have been particularly hard-hit by the coronavirus pandemic.