Global Economic

Crisis and the Health

of the Region

PRADNYA PARAMITA
Global Economic Crisis
• The three Fs: “fuel, food, and finances”--financial crisis, fuel
and food prices, plus combined and mutually reinforcing
environmental threats
• Global recession; Spillover from developed economies into
emerging economies
• Consequences in terms of poverty, malnutrition, and impact on
the most vulnerable groups
• Risk of becoming a social and political crisis
• Cutbacks in domestic investment and international
development assistance
• Threat to the real, not simply statistical, achievement of the
MDGs
Global Economic Crisis

• THEREFORE….

• Avoid errors of previous structural adjustment programs,

leading to disinvestment in the social sectors and
reduction of the regulatory capacity of the State

• Call to maintain and increase investment in health/social

sector and labor intensive programs in times of crisis

• Generate and strengthen protective/safety nets for poor

and vulnerable groups and avoid more middle income
groups to fall back into poverty

• Significant repercussions on global health and the work of

PAHO/WHO
A DIFFERENT CRISIS
All countries will be affected,
but to a different degree

GDP GROWTH IN THE DEVELOPED ECONOMIES

In annual variation rates
 The private sector is the most
exposed
LATIN AMERICA AND THE CARIBBEAN (SELECTED COUNTRIES): VARIATION IN THE FOREIGN
DEBT, 2006-JUNE 2008
(As a percentage of GDP)

Peru 7.9
-1.3% %
1.2
Mexico -1.4% %

Colombia 1.0
% 2.5
%
9.0
Chile 2.0 %
%
Brazil 4.3
-1.5% %
3.8
Argentina 2.0 %
%
-3% -2% -1% 1 2 3 4 5 6 7 8 9 10
% % % % % % % % % %
External public debt External private debt
In 2008 the Region completed six consecutive years of
growth
LATIN AMERICA AND THE CARIBBEAN:
RATES OF VARIATION IN GROSS DOMESTIC PRODUCT 2008
(In percentages)
Uruguay 11.5
Peru 9.4
Panama 9.2
Paraguay 7.0
Argentina 6.8
Ecuador 6.5
Brazil 5.9
South America 5.9
Bolivia 5.8
Venezuela 4.8
Latin America and Caribbean 4.6
Dominican Republic 4.5
Central America 4.4
Cuba 4.3
Honduras 3.8
Chile 3.8
Guatemala 3.3
Costa Rica 3.3
Nicaragua 3.0
El Salvador 3.0
Colombia 3.0
Caribbean 2.4
Mexico 1.8
Haiti 1.5

0. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.0 11.0 12.0

0 0 0 0 0 0 0 0 0 0
GDP per capita of L.A. and the Caribbean grew at over
3% annually for the fifth consecutive year
 Between 2003 and 2007 poverty and extreme
poverty fell substantially...

LATIN AMERICA: TRENDS IN POVERTY AND EXTREME POVERTY

1980-2007

Percentage of people Millions of people

60 300
48,3
50 43,8 44,0
250 221
43,5 211
40,5 200 204 193
40 36,3 34,1 200 184

Millions
Percentage

30 150 136
22.5 97
18.6 19.0 18.5 19.4 93 89 89
20 100 71 68
13.3 12.6 62
10 50

0 0
1980 1990 1997 1999 2002 2006 2007 1980 1990 1997 1999 2002 2006 2007
Indigent Poor but not indigent
Indigent Poor but not indigent

Source: Economic Commission for Latin America and the Caribbean` (ECLAC), based on special tabulations from the household surveys
of the respective countries.

a/Estimate corresponding to 18 countries of the Region plus Haiti. The figures placed on the upper part of the bars
represent the percentage and total number of poor people (Indigent plus poor but not indigent).
This reduction is due to economic growth
and better income distribution

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on special tabulations from the household
surveys of the respective countries.

a/ Guatemala (in extreme poverty) and the Dominican Republic are excluded because the results of the disaggregation are not
significant.
b/Urban areas.
Political and Economic Situation

Region in search of self-sufficiency and self-determination

Health at the center of the political agenda

How to reconcile equity and stability

Crisis in traditional political parties

Relevance of human rights approach

Binational/Border conflicts, but no war

Heightened violence and insecurity

Demographic bonus: investment in youth

 Political and Economic Situation
Lower economic growth but a better prepared Region
• Improved fiscal situation, better balance of trade (surplus), lower external
debt, and higher international reserves

• Years of prudent policies have given us greater room to maneuver to deal

with the financial crisis

ECLAC, IDB, IMF, and World Bank agree about:

• Significant growth in 2008 (estimates range from 3% to 4.5%)
• Lower growth in 2009 (estimate 2%)
• But persisting lower economic growth than other regions of the world
• Inequity remains unchanged and it is more concentrated
Substantially lower economic growth
 In 2009 a sharp deceleration in regional growth is
expected
LATIN AMERICA AND THE CARIBBEAN: RATES OF VARIATION IN GROSS DOMESTIC PRODUCT
2009
(In percentages)

Peru 5.0
Panama 4.5
Uruguay 4.0
Cuba 4.0
Venezuela 3.0
Bolivia 3.0
Argentina 2.6
South America 2.4
Brazil 2.1
Central America 2.1
Paraguay 2.0
Nicaragua 2.0
Honduras 2.0
Guatemala 2.0
Ecuador 2.0
Colombia 2.0
Chile 2.0
Latin America and Caribbean 1.9
Dominican Republic 1.5
Haiti 1.5
Caribbean 1.4
El Salvador 1.0
Costa Rica 1.0
Mexico 0.5

0.0 1.0 2.0 3.0 4.0 5.0 6.0

20 MILLION PER POINT OF DECLINE?

 Political and Economic Situation

Significant impact, especially in the social sector

• Tight fiscal situation with pressures on social investment

• Higher unemployment, informal employment, and unpaid family

employment

• Shrinking remittances affecting both the families that receive them and the
local economy

• Increase in poverty - approximately 15 million people, due to a

combination of lower economic growth and higher energy and food prices
DROP IN REMITTANCES
LATIN AMERICA AND THE CARIBBEAN: CURRENT TRANSFERS (CREDIT), 2007
As a percentage of GDP and in millions dollars

57% cover health expenditures

 Political and Economic Situation

Impact varies by subregion and country

• Mexico and Central America more affected

• South America less affected (ECLAC estimates growth for 2009 around
2%)

• Countries net fossil fuel and food importers (some Caribbean and
Central America) very affected by price variations

• Countries net fossil fuel and food exporters see fiscal revenues impacted
by price variations. (soybean prices decline of almost 50% in recent
months; mining products and fossil fuels)
A great deal can be done to cushion the
impact of the financial crisis

• Solidarity in times of crisis: safeguard progress through

commitments;

• among donor governments and the countries that

require their support: maintain promised levels of
development assistance;

• among governments and their citizens: promote an

ethical dimension in public policy, and, in particular, the
maintenance of essential social and health services; and

• among citizens: share risks and responsibilities as the

foundation for strong health systems.
Protect health expenditure
Protect the health expenditure
Social protection nets to support the poor will be
a priority

IMPORTANCE OF SOCIAL PROTECTION

• Expanding income support programs can be more effective and with FASTER impact than
creating new ones.

• Income protection i.e. temporary employment programs with a social impact, such as
construction of schools and clinics, water and sanitation, waste disposal.

• Focalizing is critical for guaranteeing that expenditure through programs reaches those who
need it.

• Conditioned transfers and more rapidly without conditions, given to women, there is data that
show that they will be used in healthy choices.

• Policy coordination from several sectors: stabilize prices, cut food prices, reduce out of pocket
expenditures, transportation vouchers, support health insurance payments, and keep children in
school.
Social public expenditure has a major influence on the
well-being of the poorest in society…
LATIN AMERICA: REDISTRIBUTIVE IMPACT OF SOCIAL PUBLIC EXPENDITURE
BY PRIMARY INCOME QUINTILES (Percentages)
(Ingreso total del Quintil V = 100)

100 9
Social expenditure %
90

80 Primary income
Percentage 70

60
91
50
%
40
16
30 %
22
20
30 % 84
10 51 % 78 %
70 %
%
49 %
0 %
Quintile I Quintile II Quintile III Quintile IV Quintile V

Source: ECLAC, based on national studies.

a/18 countries. Average weighted by the significance of spending in the primary income of each
country.
 A five-point framework for action

1. Public expenditure for the poor, with a positive health

impact
2. Leadership

3. Monitoring and analysis

4. New ways of doing business in international health

5. Health Sector Policy

(Health systems reforms based on Primary Health Care
and Health in all policies)
A five-point framework for action
A five-point framework for action

1. Public expenditure for the poor, with a positive health impact

General agreement about counter-cyclical public spending

as a means to reactivate economy

Key role in the push needed by many low income

countries, since they have no capacity or fiscal space to
finance these measures themselves.

The challenge is to guarantee that the spending will really

favor the poor and have a positive impact on health .
A five-point framework for action
A five-point framework for action

1. Public expenditure for the poor, with a positive health impact

… Public expenditure is procyclical.
The challenge today is that it be countercyclical

Latin America and the Caribbean (21 countries):

ANNUAL VARIATION IN TOTAL SOCIAL EXPENDITURE AND GDP

16

14

12
Annual rate of variation (%)

10

-2

-4
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
b/

Annual variation in Gross Domestic Product Annual variation in Total Social Expenditure

Source: ECLAC, Social expenditure and national accounts database.

a/Weighted average of the countries. b/Provisional data.

Achieve Good Health Outcomes for ALL

PRIMARY HEALTH CARE:

TACKLE DETERMINANTS
AND STRENGTHEN HEALTH SYSTEMS

• Political Action Framework

• Convergence and harmonization of institutional

agendas at different levels of intervention

• Cross-cutting issues to articulate health

systems and health determinants
 Convergence and Articulation of
Institutional Agendas
A LEVELS OF
R INTERVENTION
U T Network of
Collaborating
Centers
N Global I GLOBAL
Work C
U TCC -
Program
W c
L ooperation REGIONAL
A among Countries
H T SUBREGIONAL TRANSNATIONAL People, Families,
O Health I
and Communities
O
Agenda
N

ns
NATIONAL
for the MDG

lutio
P O
Americas HFA

Reso
A F
H A CCS - SUBNATIONAL
O G Country-/focused
Cooperation
Strategic Plan E
Other N MUNICIPAL
Decentralized
Cooperation and Dtechnical COMMUNITY
Financing Acooperation
Agencies S
Priorities of the Health Agenda for the Americas (HAA) 2008-2017 and
Strategic Objectives of the Regional Strategic Plan (SP) 2008-2012

Two basic scenarios for the HAA and the SP:

1. “Business as usual” approach

(most likely expenditures in the social sector
and particularly in health are likely to decrease) 
• This will have a major effect on the countries’ ability to deliver their
contribution to the HAA and achieve MDGs. 

• The SP is currently funded at about 50% by voluntary contributions,

the most important partners being the US, Spain, and Canada. Current
expenditures still based on previous year's budgets, but in future years
may be reduced.
Priorities of the Health Agenda for the Americas (HAA) 2008-2017 and
Strategic Objectives of the Regional Strategic Plan (SP) 2008-2012

Two basic scenarios for the HAA and the SP:

2. Alternative scenario
• (take advantage of the crisis fostering higher investment in health,
or at least protect current status)

• Considerations:
•
• Health is labor intensive, considered a critical component for
successful fiscal interventions

• Given the likely high unemployment impact of economic downturns,

there will be a need to reduce social impact. Health always a very
powerful tool

• Long-term effect of decreasing health investments will be much

more expensive to correct, plus the obvious ethical impact.
 Healthy Public Policies

Emphasis on Equity
Intersectoral Approach
LEADERSHIP
SOCIOECONOMIC
Health Promotion and Participation
POLITICAL
FINANCING AND INSURANCE Social Protection ENVIRONMENTAL
Human Rights CULTURAL AND LIFESTYLE

SERVICE DELIVERY Gender, Ethnicity and Intercultural

BIOLOGY & HEREDITY

HUMAN RESOURCES

MDGs
 Health for ALL
Right to H Equity Solidarity Social Justice
ea lth Universality tat e Res ponsibility
Participation S

Healthy Public Policies

Emphasis on Equity
Intersectoral Approach
Health Promotion and Participation
Social Protection
Human Rights
Gender, Ethnicity and Intercultural
Mainstream the gender, ethnic, and intercultural
approach in all interventions
 Convergence of thought and action

Move from the Guarantee the Eliminate and Strengthen Global health
risk approach benefits of eradicate health systems security and the
to the science and diseases that based on primary application of new
construction of technology, affect neglected care and build a rules for relations
health and closing equity populations, workforce between countries
quality of life; gaps encouraging a capable of
gear action to local meeting the
Synergies and
social, political development challenges of the
approach and maximum results
and MDGs
citizenship-/buil through partnerships
environmental
ding for health for all and
determinants
with all
 Convergence of thought and action

Immunization Access to reliable, Access to Middle-income Timely,

as a regional validated, timely, quality countries complete, and
public resource, evidence-based health goods positioned in the shared health
maintaining health information and services global health surveillance
equity and without scenario
universal exclusion
coverage
 Public Health Policies toward
HEALTH FOR ALL

HEALTH FOR ALL

MILLENNIUM DEVELOPMENT GOALS

Primary
Health Social
Health Promotion Protection
Care

Information and Knowledge

Human Rights