The Latin America’s virus crisis, which has been destroyed by more than 8 million Covid-19 cases and reported deaths with at least 328,000 reported headlines in British media, rarely makes headlines, but remains the most affected region in the world by the ongoing coronavirus pandemic.
“The fear for many is that the area tried to do it too quickly.”
According to the Anadoru Agency, a news broadcaster run by Turkey, Latin American countries account for around 28% of confirmed lawsuits of 318 million worldwide, accounting for almost a third of the deaths around the world. Of the 15 countries with the highest mortality rates, 11 are in Latin America or the Caribbean.
Recent forecasts from the International Monetary Fund (IMF) and the World Bank express concern that Latin America and the Caribbean will suffer the greatest possible out of all market economies worldwide during the post-pandemic recovery period.
In June, the IMF reported on the “sudden” economic toll of the pandemic in Latin American countries, estimated that the cumulative economy would shrink at a record 9.4% in 2020, with only a mild +3.7% recovery next year.
Reuters reported this week that recent forecasts by the US Bank outlined a potential decline in GDP of 8.2% across the region, worse than forecasts in the Middle East, Africa and Asia.
The two biggest economies, Brazil and Mexico, have overcome the worst recession since the Great Repression of the 1930s. Brazil is currently facing a contraction of 5-7%, while the Bank of Mexico has released estimates for a decline in GDP between 8.8-12% in 2020.
Argentina was deeply struck by difficult depression after the pandemic defaulted on its citizen debt for the ninth time in history, according to analysts at Citigroup Bank.
So how can Latin America address the still-existing economic impacts of the pandemic? With the flops of social distancing rules and widespread reports of pleas to persuade the public to adopt masks in crowded places, the fear for many is that the area tried to do it too soon.
Is it too early?
A Washington Post report earlier this month describes a scene on the ground in Argentina’s capital Buenos Aires on a busy boulevard in the city where “many people without masks were walking and chatting.”
The country’s president, Alberto Fernandez, began revoking strict lockdown measures for several months when he announced his return to “normal life” in July.
Despite launching “one of the world’s strictest coronavirus lockdowns” early in the year, it warns citizens that “we can recover from a decline in GDP, but not from death.”
There have been frequent reports of lockdown violations, with some stores remaining open during the pandemic and online sales not being enough to keep businesses floating.
Crump’s initial success in Covid-19 cases began to unravel quickly, and infection rates began to spike again in the summer months.
People are reportedly “on the edge” as the pandemic has become a clear political underrepresentation, and the Argentine government has condemned the lockdown violations and the rise in cases of opposition groups, claiming basic freedoms are at risk.
When the closure was over, closed citizens flooded the streets of Buenos Aires. Two months after the country reopened, Argentina has seen triple cases of the new coronavirus and is now violating another 12,000 daily.
Analysts suggest that Latin American countries face the same challenges we often see in the context of US right-wing conspiracy theorists, accompanied by “the same divisive individualism as the “unified coronavirus response” to a pandemic beyond the pond.”
In fact, in Colombia, there were reports of large parties attended by thousands of people in July. The Peruvian mayor fired fire after being caught saying “going outside, getting drunk and dying from a failed attempt to avoid detection.”
Most notorious travelers to Brazil report on the incredible fl of wet beaches, packed sidewalks and masked rules.
However, the sudden surge in cases is not just a public health concern. It is also a big red warning sign that the region’s economic recovery is at stake.
If public health officials persuade governments to impose secondary-regional or national lockdowns, progress made towards a healthy economy in recent weeks will either halt or perhaps reversed entirely.
“There is a general sentiment that further lockdown measures could shatter hopes of a return to pre-Covid economic normalcy in the near future.”
What do you say about the data?
Although data on economic recovery differs between Latin American countries, there is a general sentiment that further lockdown measures could shatter hopes of returning to pre-economic economic normalcy in the near future.
The latest IHS Market Manufacturing Purchase Manager Index (PMI) data for Brazil confirmed that the country’s manufacturing sector has made significant progress in recovering to September. The company has also “strengthened its recruitment and purchasing activities, and has broadly “strengthened future production.”
In fact, the PMI rose from 64.7 in August to 64.9 in September. It represents “the most powerful improvement in sector health since data collection began in February 2006.”
Commenting on the Brazilian data, Pollyanna de Lima, Associate Director of Economics at IHS Markit, stressed that the country has been forced to overcome key supply and demand challenges as a result of the pandemic.
“There were clear indications between manufacturers and supply chains that operational capabilities were under pressure. For producers, this was evident from a record rise in the work backlog, but vendors were unable to deliver purchased inputs in a timely manner. Panelists commented on the Covid-19-related labor shortage at suppliers, and the lack of available raw materials.”
If Brazilian government chooses to implement another lockdown, supply chain issues that threaten the country’s manufacturing sector during the peak of the pandemic may once again nurture an ugly head.
This Wednesday, 33,269 new cases were recorded in Brazil, with an estimated 500,000 active infections. Reuters reported that the country saw more than 1,000 deaths in just 24 hours. Meanwhile, speculations will rise when further restrictions are imminent after Rio de Janeiro cancels its annual carnival parade for the first time in more than 100 years over social distancing concerns.
“But if growth was expected, it would have gradually recovered from the coronavirus pandemic, subject to soft restrictions both domestically and externally.”
Mexico’s PMI data continued along a similar line to Brazil, with “new optimism about future production and new orders, soft contractions of input purchases and employment,” and marked improvements from 41.3 in August to six months highs in September.
But like Brazil’s encouraging healing arc so far, de Lima warned that Mexico’s economic recovery is highly dependent on “softer” measures to combat the new surge in Covid-19 cases.
“After six months of pessimism, businesses have on average been optimistic that production will increase over the next 12 months. However, if growth was expected, it would gradually recover from the coronavirus pandemic, subject to soft restrictions both domestically and externally.”
4,446 new cases were recorded in Mexico on September 30th, with about 130,000 active cases currently recorded on health officials’ radar.
What does this mean for the long-term future of Latin America?
“Latin American countries can seize this opportunity to address years of socioeconomic dissatisfaction.”
Ten years ago, Luis Alberto Moreno, head of the Inter-American Development Bank, predicted that the 2010s would eventually thrive in Latin American countries.
However, last week, the same man said the area had missed this “rare opportunity.” This cites relatively low investment in infrastructure, high prices, the “brooding” quality of public services, and the stagnant quality of education available to aspiring young professionals.
The coronavirus pandemic may not be solely responsible for the set-off, but it puts hope that Latin America can make its 2020s registration into a decade of success stories.
Even in the region’s economically strong Brazil and Mexico, many countries face the next decade, suffer heavily from lockdown measures, and are facing the next decade from the disadvantage of not fully recovering in the coming years.
Of course, this crisis offers the opportunity to make some changes to ensure Latin America can actually thrive in the future.
Reuters has turned its attention to the brutal forces of the pandemic, saying that “exposes deep-seated structural issues that must now be addressed in widespread, long-term reforms in education, health services and the implementation of the rule of law.”
Perhaps Latin American countries will seize this opportunity to address years of socioeconomic dissatisfaction, including high poverty rates, sub-infrastructure, poor education, and help lay the foundation for a stronger economic revival over the next few years.
As with everything, the future is almost guaranteed. That being said, Latin America is facing a particularly sudden and difficult battle for economic recovery.
While this may be appealing to view as a burden, there are several benefits to the view that the coronavirus pandemic can shake the status quo to the point that ultimately plagues poverty, inequality and economic instability that has plagued the region since the end of the colonial era.
