Coronavirus

Coronavirus and Latin America: 4 Possible Outcomes

The impact on politics and economies could be felt for years to come, writes AQ’s editor-in-chief.
A couple in Mexico CityCristopher Rogel Blanquet/Getty Images

Latin America is not at the center of the coronavirus epidemic, but it’s clearly not immune either. Cases have been confirmed in a dozen countries (at least 25 in Brazil and 12 in Argentina), while financial markets are tumbling here, too – in a region that was already struggling with stagnant economic growth and political unrest even before this latest crisis hit. 

There is still so much we don’t know: The virus’ true mortality rate, the economic disruption it will cause or whether it will be less severe in Latin America’s generally warmer, more tropical climes. But it’s not too early to think about the possible political, economic and social consequences for the region’s more than 500 million people – and those who invest there. 

Here, I’ve listed four potential outcomes from the virus, based on conversations with economists, politicians and others in recent days: 

1. More anger over inequality

Protests have already been raging since October, from Chile to Colombia and beyond, with inequality as a central theme. Middle classes have been particularly upset about unequal access to services including education and healthcare. What if everybody’s Instagram starts to fill up with long lines and patients suffering (or worse) in the hallways of the region’s already overwhelmed public hospitals – while the rich get decent treatment in private clinics? 

Brazilians have for years in polls called healthcare their country’s biggest problem – more pressing than corruption, crime and double-digit unemployment. Colombians say healthcare is an even bigger issue than terrorism and guerrilla groups. All of Latin America’s healthcare systems aspire to universal coverage, but “in practice only partial coverage is offered,” as a major report by the London School of Economics noted in August. Only Costa Rica and Uruguay meet the World Health Organization’s recommendation that middle and upper-middle income countries spend 6% of GDP on healthcare; Mexico and Peru barely manage half that. 

In other words, it wouldn’t take much to tip public healthcare systems into total chaos – or fan the flames of public rage.”

In other words, it wouldn’t take much to tip public healthcare systems into total chaos – or fan the flames of public rage. Quality of care at private facilities, hospitals like Albert Einstein or Sirio-Libanes in São Paulo, matches – and sometimes exceeds – that in Europe and the United States. In an era like this one, with so much of the Western world focused on the gap between rich and poor, this contrast in treatment could become political dynamite – especially if the epidemic reaches truly tragic proportions.   

2. An even rougher year for economies.

Even when the global economy was strong in recent years, Latin America barely grew at all – managing an expansion of just 0.1% as a region in 2019 (0.8% excluding Venezuela), according to a January estimate by the International Monetary Fund. The IMF cut its forecast for 2020 growth to 1.6% (1.9% ex-Venezuela), but that was before the scope of the virus became clear. Goldman Sachs’ recently revised 1.1% forecast for the region’s seven major economies sounds more realistic – and may also have downside.  

To the problems of recent years – low investment, high debt, disruptive scandals and unhelpful politicians – Latin America’s economies must now cope with a slowdown in global growth, capital flows and, critically, trade. China, where the outbreak is thought to have begun, is the number-one trading partner for Brazil, Chile, Peru and several others. Prices for the commodities South America produces have tumbled, with soy off 6% from its January peak, copper down 10% and oil about a third even before Monday’s selloff. No wonder many global investors are especially keen to exit the region – Brazil’s real was at one point last week the world’s worst-performing major currency in 2020, down 12%. Mexico, which depends on tourism for 8.5% of its GDP, is by far the regional economy most exposed to a long-term disruption to travel. Countries with healthier economies, like Peru and Colombia, may fare somewhat better.

Even if the recovery is quick (the proverbial “V”), there may still be lasting effects on the region’s economies. Talk of “re-nationalizing” supply chains was already en vogue due to Washington’s recent trade fights with Beijing. That trend could go either way for Mexico; if it’s seen as part of an integrated North American economic matrix, this crisis could even in the long run be seen as a positive, economically speaking. But if the crisis deteriorates to the point that borders close everywhere, it would be an unmitigated disaster.

3. Changing values in politics

Even by Latin American standards, the politics of recent years has been dysfunctional – preventing the reforms countries need and chasing away investors. But severe crises have a way of forcing leaders to put silliness and polarization aside, and focus on what’s important.

Don’t laugh; there have been signs of this in Brazil, where House Speaker Rodrigo Maia extended an olive branch on Twitter to President Jair Bolsonaro on Sunday, saying “this crisis can become an opportunity for us to combine forces in search of urgent solutions.” It’s not impossible to imagine Argentina’s politicians overcoming their differences – the infamous grieta – to find an accelerated solution to their debt and other issues before they lose Wall Street’s attention entirely. In a region awash in fake news, with some of the world’s most intense rates of social media use, governments (and traditional media) also have a chance to reassert their credibility, if they are seen as sober, honest sources of facts and information during this crisis.   

Alternatively, they might screw it up. If so, coronavirus could accelerate the growing distrust in politicians and in democracy itself we’ve seen in many countries. As noted in the most recent issue of Americas Quarterly, militaries were already becoming more prominent in politics around Latin America, in ways somewhat reminiscent of the 1970s and 80s. A terrible crisis would only increase the clamor for law and order – and accelerate the return of the generals in some places.   

4. More discrimination against migrants

A backlash was already building against the unprecedented wave of migration affecting Latin America – led by the 5 million Venezuelans who have since 2016 moved to Colombia, Peru, Brazil and elsewhere. All these new arrivals have competed with locals, especially those at the bottom of the social pyramid, for jobs and social services. In a December poll, 69% of Colombians said they had an “unfavorable” opinion of Venezuelan migrants; distrust of Venezuelans in Peru rose to 68% in 2019 from 40% the year before. 

It’s easy to see how resentment and xenophobia could get worse.”

It’s easy to see how resentment and xenophobia could get worse – if Venezuelans (or Central Americans, in countries like Mexico) are seen as competing with locals for scarce medicines and hospital beds. A large spike in unemployment in host countries may have similar effects. Many observers have also worried about the virus running rampant through Venezuela, which was already a humanitarian and public health disaster. That could increase the stigma for a migration population already struggling with ailments like measles and sexually-transmitted diseases, and raise pressure on governments to try – emphasis on try – to close borders entirely.

These and other fears may prove over time to be unfounded; I certainly hope so. It’s true that, in times of great crisis, humans are capable of showing immense generosity and compassion for those in need. Also worth noting: During the great global crises of the 20th century, Latin America was often seen as a refuge, shielded by distance and geopolitics from the worst effects of war and depression. Perhaps history will repeat itself in that way, too.

ABOUT THE AUTHOR

Brian Winter is editor-in-chief of Americas Quarterly and the vice president for policy at Americas Society/Council of the Americas. A best-selling author, analyst and speaker, Brian has been living and breathing Latin American politics for the past 20 years.

Like what you've read? Subscribe to AQ for more.
Any opinions expressed in this piece do not necessarily reflect those of Americas Quarterly or its publishers.
Tags: coronavirus, covid-19, Migration

Like what you're reading?

Sign up for Americas Quarterly's free weekly newsletter and stay up-to-date on politics, business and culture in the Americas.