Latin America’s governments without a plan for the future

After the first, partly successful, crisis management, governments in Latin America are reacting in an increasingly chaotic manner: they are faced with the dilemma that they want to get the economy going again, but that this is risky because of the increasing number of infections. What is certain is that the states will increasingly close themselves off from the outside world. Regional integration seems unlikely in the near future.

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

 

In just a few days, the health situation in most Latin American countries has deteriorated dramatically. Hospitals and first-aid stations are overcrowded in many urban centres in the region. Even if the figures are difficult to compare because of the different surveys, the trend is clear: the number of infected and thus dead is still increasing. This also applies to countries such as Argentina or Peru, which reacted very early on with harsh isolation policies. It is likely to hit countries like Brazil or Mexico even harder, whose governments reacted hesitantly and continue to play down the pandemic.

For the Region as a whole, it is clear that governments have no plans for dealing with the public health crisis and its economic and social consequences. The newfound popularity that some presidents were able to build up at the beginning of the crisis – this could soon be dissipated. Like in Peru, where despite the strict isolation policy, unemployed people are trying to flee the cities because they can no longer earn a living there.

In Brazil the government is acting chaotically. It constantly triggers new political crises but has no national plan for the state of emergency. Brasília has largely left crisis management to governors and mayors. In Mexico, too, the government has so far failed to introduce any measures to alleviate the consequences for the economy, although it is currently experiencing a severe crash.

In view of the helplessness, governments are applying recipes that were long believed to have been overcome in Latin America: They close the borders, stop all regional cooperation. Argentina has now left Mercosur for further integration negotiations. This marks the beginning of the end of Mercosur in its present form. With the foreseeable payment freeze on its foreign debt, Argentina is thus moving back towards isolation, as it did from 2002 to 2015.

In the future, companies and investors in Latin America should prepare themselves for national markets protected by customs duties, with the associated preferential treatment and subsidies for national companies.

COVID-19 in Latin America

Development of case numbers in the region


Currently reported cases in the countries

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