Health workers travel to Arquipa, Peru, in 2021 to vaccinate the elderly against Covid-19. DIEGO RAMOS (AFP)
The Covid-19 pandemic has weakened some countries’ resources and capabilities to deal with another crisis of this magnitude. Among the 37 emerging economies surveyed by the independent, non-profit analytical laboratory Center for Global Development (CGD), Argentina is the world’s second weakest economy, followed by Sri Lanka. Bolivia and El Salvador are ranked 33rd and 30th respectively, while Colombia stands out as one of the countries that fell the most in the rankings between 2019 and this year due to high debt and high inflation.
The CGD has created a “Resilience Indicator” that assesses a basket of developing countries using macroeconomic data from the International Monetary Fund, the World Bank, national statistical offices and other public sources. The indicator combines debt levels, international reserves, deviations from announced inflation targets and similar metrics, as well as quality measures of institutional governance, to determine which emerging markets are best and least prepared for another global shock, such as a financial crisis or another pandemic.
“Today, emerging markets as a group are more vulnerable than in 2019,” wrote the economist who created the indicator, Liliana Rojas-Suárez, director of the CGD Latin America Initiative. “We must now pay attention to the warning signs that lie ahead and it is important that we know which countries are most vulnerable,” he warned.
Peru fell from first place in 2019, i.e. best prepared, to third place this year. Guatemala, Chile and Mexico are also among the ten best prepared countries. Ecuador rose eleven places this year to reach 22nd place, making it stand out as one of the countries that has strengthened its macroeconomy the most in recent years. Brazil, for its part, has moved up one place but is still among the ten least prepared countries.
The Latin American region has shown a strong ability to contain inflation following the spiral triggered by the Covid-19 pandemic between 2020 and 2021. According to the study, only six emerging markets in the world currently have inflation rates in the range of the targets announced by their central banks and the majority are in Latin America: Brazil, Bolivia, the Dominican Republic and Paraguay. In comparison, 20 countries had inflation rates that were within target in 2019. Colombia is the major exception in Latin America, as the country is still suffering from a cost of living increase of around 11% year-on-year
“Policymakers need to be clear about how their countries are doing now, rather than waiting for a ratings agency to downgrade their creditworthiness before acting,” Rojas-Suárez wrote in a statement.
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