HANNOVER — Manufacturing in Latin American has been hit hard by the COVID-19 pandemic in 2020, with significant decreases in industrial production, intra-regional trade and exports compounding existing barriers to growth.

However, accelerated digitalization prompted by the crisis offers an opportunity for transformative reforms and closer intra-regional cooperation and trade integration, believes a panel of experts that convened virtually for the Global Manufacturing and Industrialization Summit’s GMIS2020 Digital Series on "Latin America and the Caribbean: Manufacturing and Economic Growth in the post-COVID-19 Era".

Diego Masera, Deputy Director of the Regional and Field Coordination Department and Chief of the Regional Coordination Division for Latin America and the Caribbean (UNIDO) opened the session by noting that the disruption of the COVID-19 pandemic in the region had been "exacerbated by weak social protection structures, fragmented health systems and deep inequalities."

Masera highlighted that COVID-19 will cause the region's worst recession in the past 100 years and generate a 9.1 percent contraction of regional gross domestic product, GDP, in 2020 according to ECLAC data. Referencing United Nations Secretary-General Antonio Guterres’s recent report on the impact of COVID-19 in the region, Masera added, "There is a need to build back with equality by fostering sustainable industrial and technological policies, and stronger regional economic integration."

Silvia Ortega, manager of international affairs at the National Society of Industries in Peru, noted that the pandemic containment measures had led to a regional shortfall in goods and a freeze to transport systems, bringing regional economic activity "to a standstill".

She observed that Latin American countries in many cases re-shored to their countries of origin, worsening regional trade and production, leading to a fall of 22 per cent in expected exports, with countries dependent on markets in Asia at risk of being the most exposed. In the longer term, the region needs to rethink its economic model, she believes.

Dr. Clemente Ruiz Durán, national researcher of the National Council of Science and Technology (CONACYT), and professor at the National Autonomous University of Mexico, noted that digitalization has allowed the economy to continue functioning. He stated that digitalization would enable sustainable energy, mobility, communication and transport systems.

Dr. Durán urged pairing initiatives between micro, small and medium enterprises, MSMEs, and large firms for integration in regional value chains, and training programs. "I propose to turn our eyes towards Latin America instead of the rest of the world," he said.

Tomás Karagozian, President, UIA Joven/ Unión Industrial Argentina, stressed the importance of a regionalized economy, advocating for increased dialogue and consensus to "overcome these recurring crises that we go through every four to five years."

He underlined the need for institutional reforms, including incentivizing "good behavior", the formal economy through reducing taxes, combining work and training for young people, and public-private partnerships. Karagozian noted that digitalization had accelerated during the pandemic, but Latin America continues to face issues of management and leadership, and value chain integration, while being poised to benefit from productivity increases.

Masera conceptualized the crisis as an opportunity to move towards sustainability, social equity and the achievement of the Sustainable Development Goals. "Indeed, this crisis provides an opportunity to change our approach to the development of manufacturing in the region. In this regard, we must focus our energies on supporting more inclusive, sustainable and people-centered development," he urged." — WAM