COVID-19 and the looming ‘economic pandemic’ in Latin America

Jun 17, 2020

By Syed Ali

In the last 100 years, more than 400 million lives have been lost to ten pandemics worldwide. Major outbreaks included the Spanish flu (1918-1920), Asian flu (1957-1958), Hong Kong flu (1968-1970), Swine flu (2009-2010), and the contagious COVID-19 virus. The spread of the COVID-19 or the Coronavirus has been rising exponentially with 8 million cases in 7 months alone.

The faster mobility of the diseases is attributed to the access of connectivity for people; spreading germs through contact. As a result of this, the COVID-19 virus in Wuhan, China, has changed several hotspots, beginning with the country of origin and then shifting to Western Europe, the United States of America, and now South America. South America or the predominantly Latin America has had a traumatic relationship with pandemics because of its colonial past. The Spanish invasion also transmitted the smallpox virus wiping out almost 90 % of the indigenous population.

The worrying trend in the shifting of the epicenter is its descent from high-income countries to medium and low-income countries. As a result, Latin America is profoundly affected by the Coronavirus due to its struggling healthcare infrastructure, and the economic apprehensions which may engulf the region soon and prove to be more fatal than the Corona Virus. As of now, over half of the active coronavirus cases are in the Americas, predominantly concentrated in three countries; the U.S.A, Brazil, and Peru. Subsequently, the World Health Organization (WHO) has designated South America as the new epicenter of the COVID-19 virus. Brazil has the most number of cases followed by Peru, Chile, and Mexico. Unfortunately, with the rapid increase in infection, testing is becoming a challenge in Latin America.

In Brazil, a significant number of deaths have been of younger people, unlike in Europe and the United States, where the elderly were hardest-hit.  Latin America faces the acute problem of inequality with sections of extreme poverty, where people live without health coverage and are often driven to work despite the threat of infection. Almost 130 million people in Latin America are part of the unorganized/informal economy making them vulnerable to fall between gaps of the social security nets. In addition to this, fear of coronavirus and loss of jobs have started to create social unrest.

Costa Rica with one of the lowest COVID-19 infection rates is facing cross-border virus transmission from Nicaragua. In Nicaragua, the government has largely ignored the pandemic, a decision that has led to the country having widespread community transmission due to the lack of restriction on the mobility of people. This is having consequences for Costa Rica’s Northern Zone sharing a 300 km unfortified border with Nicaragua. In Ecuador, despite the restrictions, the streets of Guayaquil were littered with corpses, warning how a full-blown outbreak may look like if restrictions are not imposed.

Public health care infrastructure is the key to any country’s capacity to deal with the pandemic. In some Latin America countries, the health care infrastructure is gutted due to the low expenditure, averaging at 3.7% of the GDP, well below the 6% mark as recommended by the World Health Organization (WHO). This means less preparedness with fewer ICU beds, ventilators, and protection for healthcare workers. However, Cuba is an exception in the region, with its socialist disposition it has strengthened its healthcare system vastly, and it has also devised the policy of ‘medical internationalism’ and sent out medical assistance to more than a dozen countries.

Latin America has been the slowest-growing region in the Global South. To make things worse, the COVID-19 pandemic has struck at a time when Latin American economies were already facing some of the deepest slumps in recent memory. Countries that a decade ago were striking a growth rate of 5% and above have fallen to 1% or less. Latin American economies are particularly vulnerable because their growth models are predesigned to trade and investment withmainly three countries; China, Europe, and the United States. Demand from these countries for primary commodities like oil, coal, copper, and zinc had been a blessing during the “commodities boom” of high prices, between 2002 and 2012. However, by mid-April 2020, 14 Latin American countries approached the IMF for emergency assistance. The exigency to rescue a floundering economy during the time of the Pandemic, gives rise to the discomforting conundrum, whether to resume the economy or not. As per Dr. Marcos Espinal, Director of Pan America Health Organization (PAHO), “It is not yet time to reopen, however, each country is sovereign”. This debilitating dichotomy has enraged President JairBolsonaro, he downplayed the virus by referring it as the ‘little flu’ and

lambasted his governors for imposing restrictions causing the economy to cripple further. Reopening the economy has its repercussion since major Latin American countries; Brazil, Chile, and Mexico, are experiencing daily infection increases of up to four or five percent. However, the economy is also on the ventilator along with its citizens. As described by the General Secretary of the UN Economic Commission for Latin America and the Caribbean (ECLAC) Alicia Barcena, “The crisis could provoke the region’s ‘worst recession in history”, she further added, and “We’re worried the region could come out of this crisis with more debt, poorer, hungrier and with more unemployment. And most of all, angry.” The Coronavirus has truly struck the very Demography of Latin America and has consequence may that transmit to other facets of its society.

The post about “COVID-19 and the looming ‘economic pandemic’ in Latin America" first appeared on the Financial Express website.

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