Latin America is facing two decisive weeks

In Latin America, the next two weeks will determine the extent to which the virus will infect the population and the death rates. What is decisive is how severely the poor majority of the population will be affected. The signs are contradictory. The financial investors have already made their decisions. They are withdrawing their capital.

by Alexander Busch, Latin America correspondent for Handelsblatt and Neue Zürcher Zeitung


Only at the beginning of May will there be more clarity in Latin America as to the extent to which the population will be infected by the Covid 19 virus. So far, most infections occur in urban centres and especially among the middle class. However, the middle class is small compared to Europe and lives more isolated from the poor majority of the population in Latin America. It therefore remains to be seen how the pandemic will affect the poor areas of the continent. On the one hand, there are local trouble spots with overburdened hospitals and funeral services, as in Ecuador’s metropolis Guayaquil or the Amazon capital Manaus in Brazil. On the other hand, public health services, for example, are not yet reporting an exponential increase in the number of cases of illness.

The problem throughout Latin America is that governments can hardly base their plans for opening up the economy on empirical data. There are far too few tests for representative surveys of sick leave. It is illusory to expect them to be available in the coming weeks, as some governments repeatedly announce. Only when the sick contact the public health systems will the estimates of the effects of the corona crisis be more realistic than they have been so far.

The local investment banks are monitoring the course of the crisis very closely and are publishing extensive analyses. The reason: the uncertainty about how things will continue is a huge risk and therefore cost factor for their customers, the investors.

However, the majority of financial investors have already made the decision: they are withdrawing their capital from Latin American bonds and debentures. The B3 stock index in São Paulo, the key stock exchange for the entire region – has lost around 50 percent in dollars since the beginning of the year. The prospects of these portfolio investors returning soon are slim. The tenor of the investment banks’ analyses is that it is not worthwhile for investors to take the Latin American risk at present. On the other hand, the recovery and growth prospects for the region are too weak in the medium term. The rapidly rising deficits due to the aid measures and tax shortfalls and the debt of states and companies will delay the economic recovery.

COVID-19 in Latin America

Development of case numbers in the region

Currently reported cases in the countries

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