Peru, Panama and Bolivia, the three Latin American countries with the greatest prospects for economic recovery in 2021  

After the health crisis caused by the global pandemic of the COVID-19, a worldwide economic crisis followed. Many countries hit bottom this 2020, but are expected to rebound by 2021, including three of these Latin American countries that will see a "rebound effect".  

This does not mean economic growth, but rather a sharp increase in the gross domestic product (GDP) of a large number of countries in South America. This will lead to compensation for the current situation.   

The Economic Commission for Latin America and the Caribbean (ECLAC) estimates that the regional economy will shrink by 7.7 percent, and by 2021 it is expected to grow by 3.7 percent. This means that a slow process of recovery is taking place.  

We will see a “rebound effect” or “statistical drag”, that is, a strong increase in the Gross Domestic Product (GDP) in Peru, with 9%, Panama, with 5.5%, and Bolivia, with 5.1%. 

The first will close 2020 with a fall of approximately 13% and next year will increase by 9% according to the latest projections of the ECLAC. This means that it will not recover to its pre-crisis level as in many Latin American countries. This would make it the country with the greatest economic take-off in Latin America after being the second worst in the regional performance ranking (after Venezuela) in 2020.  

Despite the devastating economic impact of the pandemic in Peru, the Minister of Economy and Finance, Waldo Mendoza, said that the country is showing a recovery “much faster” than the rest of the countries in the region. Among the reasons, he mentioned a decrease in the advance of the pandemic and the effects of the stimulus packages aimed at containing the economic crisis. 

The country is under the government of Francisco Sagasti, who took over the presidency of Peru in mid-November in the midst of a deep political crisis. But the presidential elections have been called for April 11 and a second round is scheduled for June if no winner emerges.   

The country's hope lies in better results expected in the mining sector, specifically in products such as copper. But the main concern is what will happen to employment and underemployment, and how to get the necessary vaccines to control the virus. 

Panama is the second country, after Peru, with the highest GDP growth rate projected for 2021, according to ECLAC, which in turn depends on recovery from the pandemic.  If more confidence is generated in the population, domestic consumption will increase and the expectation to do business in the country will improve. 

After the 11% economic slump, Panama will increase its economic activity by 5.5%. This includes the expected resumption of operations by the Copay airline and of commercial and financial activities.  

It is expected that world trade will recover in 2021 and that this will continue to positively influence the reactivation of commercial flows in the activities of the channel. Growth is also expected in domestic trade, such as construction and financial services.   

One of the biggest challenges for next year, the experts agree, is the generation of employment in a country with high levels of inequality, where access to resources is not guaranteed. Basic services in rural areas inhabited mainly by indigenous populations and Afro-descendant communities, which will make it difficult to generate employment. At the same time, the concern lies in the possibility that inequality will grow as a result of the health crisis. 

Bolivia ranks third among Latin American countries that could have a greater rebound effect on their economy, with growth of 5.1% in 2021, after a deep drop of 8% in 2020, according to ECLAC calculations. And the national budget for next year reflects a sharp increase in indebtedness and public spending to underpin economic growth. 

After a long period of political instability in the country, the government of Luis Arce, which began its mandate on November 8 after a long period of political instability in the country, is promoting a series of measures that include a increased public investment, delivery of bonds and credits with low interest for producers and the creation of a permanent tax on large fortunes. 

It is expected that domestic demand will be activated and that more economic dynamism will be generated as a result of the productive recovery measures being carried out by the government.  

Furthermore, hope also lies in the sale to Southern Cone countries of Bolivia's main and essential resource, natural gas. In turn, the recovery will be influenced by the recovery of the virus, which will depend on whether measures must be taken to restrict economic activity and the mobility of people.   

At the same time, the influence of the global economy and the prices of natural resources will condition the recovery of the Bolivian economy.