Even after five months of the pandemic, Latin America is still not experiencing declining infection rates. Nevertheless, governments are less and less able to enforce social distancing measures. As a result, growth rates are improving in the short term, but the recovery will be slower because of the necessary new closures.
by Alexander Busch, Latin America correspondent for Handelsblatt and Neue Zürcher Zeitung
Latin America has now been living with the Covid 19 pandemic for five months, but unlike China or large parts of Europe, overall infection rates are not yet declining. On the contrary, the infections are rising or even exploding again and again in individual regions and countries. There can therefore be no question of the all-clear. This does not even apply to Uruguay, which has the lowest infection and death rates thanks to its exemplary crisis management, although the neighbouring countries Argentina and Brazil are severely affected by the pandemic.
After two months of quarantine measures, governments are finding it difficult to keep their populations isolated. This leads to total or partial openings in trade and services, which then have to be withdrawn again because the number of infected people is soaring, as in Argentina, Chile, Colombia or Brazil.
These hasty openings have the paradoxical effect that some of the growth figures for the second quarter have turned out better than expected. This is particularly true of Brazil, Mexico and also Chile, which have not launched any or not consistent distancing programs. By contrast, the countries with the toughest lockouts, such as Peru and Argentina, are experiencing the most severe recessions. Nevertheless, these figures should not tempt us to be prematurely optimistic: If there are new lockouts, the economic recovery will take longer.
The massive government compensation measures in Chile and Brazil are having a positive effect on the economy. China’s and possibly Europe’s faster recovery could also provide a growth spurt in South America through further export growth in raw materials from agriculture and mining. This also applies to Mexico, which could benefit from a recovery of the US economy, although this is not yet apparent. The mood on the financial markets has also improved: In recent weeks, states and companies from Latin America have had access to international credit for the first time again.
The strongest recessions will be experienced by Mexico (-10.5%), Peru (-13.5%) and Argentina (-13.4%) this year, JP Morgan expects. Brazil’s growth outlook has just improved to -6.2%. Latin America’s economic power will shrink by 8.6% this year. Due to the likely repeated quarantine measures, the region will recover only weakly in 2021 (4.1% growth) despite the worst slump in 100 years.
COVID-19 in Latin America
Development of case numbers in the region
Currently reported cases in the countries