Coronavirus Pandemic to Shrink Latin Economies
In Latin America, the first cases of the disease were detected at the end of February. Four months later, at the end of June, the number of people infected in Latin America has reached more than twenty-three percent of the global total and twenty-two percent of daily deaths as the rapid spread of the virus has turned the region (particularly South America) into the new global epicenter of the pandemic.
The pandemic has furthered – sometimes dramatically – a series of economic and social processes that were already underway before the virus emerged. Capitalism’s crisis of legitimacy and increasingly authoritarian neoliberal reforms have put these policies under question. The expansion of the virus has also shined a light on the dismantling and privatization of public healthcare – the result of decades of neoliberalism – as well as on the increasing precariousness of labor and the living conditions and quality of life of the people.
The 3Contintental Organization published the following: "The current crisis, therefore, is not an isolated or anomalous event. Rather, it rests on top of decades of disastrous neoliberal policies and shines a light on neoliberalism’s failure and inability to combat the underlying health crisis that it caused through its very own framework. It was the conditions of neoliberalism that triggered the crisis; not an inevitable series of external events. It is not a coincidence that the countries that are suffering the most from the impact of the virus are the countries whose governments are most closely aligned with the neoliberal project – the same countries that have ignored the recommendations of the WHOThe current crisis, therefore, is not an isolated or anomalous event. Rather, it rests on top of decades of disastrous neoliberal policies and shines a light on neoliberalism’s failure and inability to combat the underlying health crisis that it caused through its very own framework. It was the conditions of neoliberalism that triggered the crisis; not an inevitable series of external events. It is not a coincidence that the countries that are suffering the most from the impact of the virus are the countries whose governments are most closely aligned with the neoliberal project – the same countries that have ignored the recommendations of the WHO"
The World Bank report said that although Latin economies may fall hard this year because of the pandemic, it predicts a 2.6% recovery by 2021.
Latin and Caribbean countries that rely on tourism and foreign dollars have been particularly hard-hit by the coronavirus pandemic.
Panama
Panama's economy is small, very much open, highly diversified, dollar-driven, and highly competitive by regional standards. The country experienced strong growth of 3% in 2019, driven by the financial sector, infrastructure spending, and revenue from the Panama Canal.
According to the updated forecasts from 14th April 2020, due to the outbreak of the COVID-19, GDP growth is expected to fall to -2.1% in 2020 and pick up to 4% in 2021, subject to the post-pandemic global economic recovery.
As of March 17, 2020, Panama had more cases of coronavirus (COVID-19) than any other country in Central America, with eighty-six confirmed cases.
Chile
Chile is traditionally considered a model in Latin America in terms of political and financial transparency. It has also been one of the fastest-growing economies in Latin America over the last decade, enabling the country to significantly reduce poverty (World Bank). According to the IMF, GDP increased by 1.1% in 2019, against 3.9% in 2018. According to the World Bank, the slowdown is due to challenging external context, adverse climatic conditions, and delays in some government reforms.
According to the updated IMF forecasts from 14th April 2020, due to the outbreak of the COVID-19, GDP growth is expected to fall to -4.5% in 2020 and pick up to 5.3% in 2021, subject to the post-pandemic global economic recovery.
The Government's balance closed at -1.6% of GDP in 2019 and is projected to decrease to -1.4% in 2020 and -1.2% in 2021
Colombia
Colombia has experienced stable and solid growth for most of the past two decades. However, the country was affected by the fall in oil prices, as oil accounts for nearly 50% of its total exports. Still, GDP grew by 3.3% in 2019, mainly supported by stronger investment growth, and accommodative monetary policy. According to the updated IMF forecasts from 14th April 2020, due to the outbreak of the COVID-19, GDP growth is expected to fall to -2.4% in 2020 and pick up to 3.7% in 2021, subject to the post-pandemic global economic recovery.
Brazil
Brazil is the world's eighth-largest economy. The country is still working on rebuilding itself after the recession that happened five years ago when the economy contracted by almost 7%.
In 2019, the country's GDP grew 1.1%, against 1.3% in 2018, and it is expected to fall to -5.3% in 2020 due to the outbreak of the COVID-19 and pick up to 2.9% in 2021, according to the updated IMF forecasts from 14th April 2020.
Brazil has seen a record number of coronavirus deaths as the pandemic that has swept across the world begins to hit Latin America with its full force.
Peru
Peru's growth peaked at an average of 6% between 2004 and 2012. However, Peru faced economic difficulties in 2015, and while the situation has improved since, growth levels haven't been able to reach the same rates they used to. In 2019, GDP grew 2.2%, driven by sound fiscal and monetary policies and by growth in services, mining and fuel, and manufacturing. According to the updated IMF forecasts from the 14th April 2020, due to the outbreak of the COVID-19, GDP growth is expected to fall to -4.5% in 2020 and pick up to 5.2% in 2021, subject to the post-pandemic global economic recovery.
Peru reported over 15,000 cases of coronavirus on Sunday, the second-highest tally in Latin America, as the disease continues to ravage the economy of the world's No. 2 copper producer.
Uruguay
The Uruguayan economy is significantly dependent on its neighbors, Brazil, and Argentina. As such, the country's growth rate was weak in 2019, at 0.2%. That was due to the recession in Argentina and the economic slowdown in Brazil, as well as lackluster international financial markets and the domestic fiscal situation. According to the updated IMF forecasts from 14th April 2020, due to the outbreak of the COVID-19, GDP growth is expected to fall to -3% in 2020 and pick up to 5% in 2021, subject to the post-pandemic global economic recovery.
Costa Rica
According to the IMF, Costa Rica's GDP grew an estimated 2.1% in 2019, slightly less than the previous year (2.7%). The deceleration of the growth rate was largely attributed to a difficult fiscal situation in the country, as well as the political turmoil in Nicaragua, a key trade partner and transit zone for exports to Central America. According to the updated IMF forecasts from 14th April 2020, due to the outbreak of the COVID-19, GDP growth is expected to fall to -3.3% in 2020 and pick up to 3% in 2021, subject to the post-pandemic global economic recovery.
Mexico
Mexico is among the world's 15 largest economies and is the second-largest economy in Latin America. The country is highly dependent on the United States, its largest trading partner, and its destination of 80% of its exports. In 2019 the economy recorded an estimated growth rate of -0.1%, compared to 2.1% the previous year, due to a climate of uncertainty following President López Obrador’s first year in office, as well as reduced domestic demand and investment. According to the updated IMF forecasts from 14th April 2020, due to the outbreak of the COVID-19, GDP growth is expected to fall to -6.6% in 2020 and pick up to 3% in 2021, subject to the post-pandemic global economic recovery.
Ecuador
“The COVID-19 pandemic has had a devastating impact in Ecuador, along with plummeting oil prices and a sharp drop in global demand. The authorities have taken bold policy steps to mitigate the socio-economic fallout from the crisis, notably proactive measures to contain the spread of the virus and to accommodate the needed health-related spending.
IMF Executive Board Approves US$643 Million in Emergency Assistance to Ecuador to Address the COVID-19 Pandemic
Argentina
Argentina has sharply cut its economic forecast for 2020 due to the coronavirus pandemic, according to a government analysis that estimated a 6.5% contraction for the year, with activity stalled by a nationwide lockdown and weak global demand.
The draft forecast, which was prepared by the economy ministry as part of an economic framework for the country’s foreign bondholders, compared with an earlier analysis that estimated the economy would contract by between 1% and 1.5% this year.
Source: https://www.nordeatrade.com/fi/explore-new-market