Ukraine conflict causes soaring debt and increased poverty and inequality across Latin America and the Caribbean
QUITO, 6 APRIL 2022 – Price rises and disruptions to global trade are likely to lead to increasing debt across Latin America, a region already experiencing the highest debt in the world, and some of the greatest levels of inequality, warns CARE.
The region is currently still reeling from the impacts of the COVID-19 pandemic, with the economic effects of the pandemic often referred to as the worst since the Great Depression. According to information from the Central Bank, Ecuador’s total losses in 2020 reached USD 16.3 billion –or 16.6 per cent of the Gross Domestic Product (GDP). This has meant a 7-year setback in terms of production and income and has led to devastating consequences, such as increasing poverty and extreme poverty, especially among already vulnerable, marginalized, and populations facing discrimination.
According to Alexandra Moncada, CARE Ecuador Country Director, “Without a doubt, for Latin America, the economic effects of the Ukraine conflict will be significant and even devastating, depending on the evolution of events. The region was one of the worst-hit by COVID and is still recovering and seeking solutions to the economic devastation caused. The impacts of the situation in Ukraine may vary somewhat depending on the financial situation of each country, but those with very high debt may suffer much more complex consequences if the conflict continues. Latin America is already the most indebted region in the world. Despite the distance, this conflict also impacts pockets of the population in this region, which continue to suffer from some of the highest levels of inequality in the world.”
In the case of Ecuador, rising oil prices resulting from the ongoing Ukraine conflict are likely to be accompanied by rising inflation and low economic growth. The crisis is also affecting the flow of exports from Ecuador to Europe and Asia – a major source of the country’s revenue. According to local media, exporting companies have already noted losses of up to USD 2.5 million per week and warn of the risks to their sustainability and widespread job losses as the situation continues.
“Across Ecuador, poverty has grown exponentially in 2022,” Moncada notes. “Of almost 18 million people, 35 per cent live in poverty; on less than 2 dollars. 40 per cent of households are facing food insecurity, and almost 8 per cent of girls and boys are likely to have to abandon their studies to work or engage in unpaid care work. Gender-based violence also continues to grow alarmingly, affecting 7 out of 10 women while 9 out of 10 migrant women and people of non-binary gender report facing daily incidents of violence. This context of enormous fragility for Ecuador is an urgent wake-up call not to lose sight of the collective efforts to promote sustainable and structural responses that leave no one behind.”
Moncada adds, “The country requires greater public and private cooperation, as well as multilateral financial support that incorporates conditions linked to the redistribution of wealth and income, and attention to the heavy demands of the population at risk, so that the poorest countries with highest levels of inequality such as Ecuador, can be reactivated and resist the financial and economic shocks produced by a conflict like this one; that seems distant but feels ever closer.”
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Founded in 1945 with the creation of the CARE Package®, CARE is a leading humanitarian organization working around the globe to save lives, defeat poverty, and achieve social justice. CARE puts women and girls at the centre of our work because we know we cannot overcome poverty until all people have equal rights and opportunities. CARE develops solutions alongside women and girls to lift themselves, their families, and communities out of poverty and out of crisis. CARE works in over 100 countries around the world.
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