The impact of COVID-19 in Latin America

When Asia was already recovering from the pandemic, and it was Europe, with Spain and Italy leading the way, the epicenter of the virus, in mid-March, the numbers of COVID-19 infections and deaths in Latin America were 2,999 cases and 55 deaths. But by the end of April, the number of people infected in the region had already surpassed 200,000 and the number of deaths had reached 11,000.

Time seemed to be playing in the region's governments' favour. They saw what was happening in Rome, Madrid, London, Paris... but, although some governments, like Argentina's, promoted early confinement, the limitations of Latin American countries in terms of resources made dealing with the coronavirus a difficult task.

Four experts from the region discussed these problems and possible solutions for overcoming the social and economic crisis that is already hitting the region following the health crisis, in a debate organised by the Real Instituto Elcano and moderated by Rafael Estrella, its vice-president, on 30 April.

Carlos Malamud, Senior Researcher at the Real Instituto ElCano; Jorge Sicilia, Chief Economist at BBVA; Susana Malcorra, Dean of the School of Global and Public Affairs at IE University and former Minister of Foreign Affairs of Argentina; and Cristina Gallach, Secretary of State for Foreign Affairs and for Ibero-America and the Caribbean, discussed the challenges and questions raised by the crisis and the options for recovery, taking into account the heterogeneity of the region.

"Political leadership is at stake in a crisis of this nature," said Malamud. In recent weeks, Latin American leaders have shown different ways of dealing with the pandemic. "We can divide into three groups how countries have dealt with the crisis: those who have done it badly: Jair Bolsonaro (president of Brazil), Andrés Manuel López Obrador (president of Mexico), Nicolás Maduro (president of Venezuela) and Daniel Ortega (president of Nicaragua); then there are those who have done it regularly, such as the president of El Salvador, Nayib Bukele, Lenin Moreno in Ecuador or Diaz Canel in Cuba; and a third group that is managing the crisis quite well, such as Luis Alberto Lacalle in Uruguay or Alberto Fernández in Argentina".

Managing the crisis in a context marked by the weakness of the state apparatus and public administrations, with a health system that is quite decimated, especially in terms of the number of doctors, beds and intensive care units, is complicated. Argentina's former foreign minister, Susana Malcorra, adds a lack of cooperation between Latin American states to these problems. "There is a significant ideological fracture in the region, which is not allowing for common policies". For example, the European Union has not yet set up a panel where "they can share experiences, knowledge and information on the development of the virus in their countries".

This lack of cooperation has been going on for a long time in the region. "There have been a couple of meetings of the Forum for Progress in South America (Prosur), but neither Mercosur nor Cedac have done much," Malamud notes.
 

On the economic front, this crisis is going to have much more pronounced consequences than the crisis of 2008 and the Latin American debt crisis of 1981, according to Jorge Sicilia of the BBVA bank. "The level of uncertainty is extreme, and the forecasts are worse than in the crises of '81 and 2008". 

In the great recession of a decade ago, Latin America was living a time of apogee and good economic results, "thanks to the boom of commodities, such as oil or soybeans", but now the situation is completely different. For a few years now, Latin American countries have been immersed in deep economic crises, coupled with political uncertainties as in Chile or Bolivia.

In addition, decreased demand for exports, since both the United States and China, which are the main buyers, are going to see a recession in their economy and, therefore, demand less; the hard blow to tourism, especially in Central America, where it is one of their main sources of income; and the sharp drop in oil prices and the reduction in remittances, are drawing a bleak future. "The pre-crisis GDP values will not be recovered," predicts Sicily. 
 

Another issue of concern is the number of people who depend on the underground economy and who therefore "need to leave their homes to get a plate of food," says Malcorra. "More than 40% of the population lives in the underground economy, and in Peru it is 70%," adds Malamud.

Although confinement measures are the best way to prevent the spread of the virus, in most Latin American countries it is a huge effort for citizens, who also tend to share houses with a large number of people. For this reason, and from the Secretariat of State for Latin American Affairs, Gallach assures that it is of vital importance "to confront the underground economy that weakens the economic world of the countries so much.

The Secretary of State assures that the Government is already setting up dialogue panels and programmes to cooperate with Latin American countries, with the digital divide being one of the key issues, as well as strengthening governance and institutions.
 

The consequences of this crisis are yet to be seen, but Malcorra already highlights the concern of the authoritarian drift that some governments are carrying out for the greater control of the population, "the social tensions that were already developing, in addition to the pressure from the economic crisis and makes some governments in the region incline towards more rigid measures and with a greater severity cutting back on freedoms and rights".

Greater inter-regional cooperation and a strengthening of democratic governance and institutions will be, for the four guests in the debate, the keys to emerge stronger from this crisis, which is no longer just about health.