While it is impossible to predict how the coronavirus will spread in Latin America, one thing is certain: Recession will hit the region hard. According to the World Bank’s most recent estimate, made while the effects of the pandemic in the region were just starting to spread, Latin American economies are expected to contract by 5% in 2020. A recent study by Oxfam, meanwhile, estimates that the crisis will push half a billion people into poverty — some 10% of them in Latin America. This is a recipe for political instability.
Political analysts debating the medium- and long-term consequences for the region are sounding the alarm: Permanent change is inevitable, and promises that things will soon be back to normal are counterproductive. To address the situation, Latin America’s leaders need to adopt a unifying message and reach across ideological divides. They should also prepare the public to accept the need for radical solutions that could go against their voters’ core beliefs.
In that sense, the coronavirus crisis presents some opportunities. Extreme circumstances tend to erode long-held convictions and can help overcome inertia and entrenched privileges. That could help Latin American governments implement sensible but elusive reforms to ease the region’s staggering inequality, which the pandemic could worsen considerably if left unaddressed.
Open-minded debates about policies like universal basic income (UBI), once confined to policy wonks with little access to mainstream politicians, are now being discussed across the ideological spectrum. Pandemic-induced economic collapse may provide policymakers a chance to invest in government capacity and redesign the many taxes and transfers offered by Latin American governments that have so far failed to reduce inequality, often benefiting those higher up the income pyramid instead.
Erecting barriers and limiting regional trade would unnecessarily prolong the economic crisis.
There is also an opportunity for better regional coordination, which will be essential to mitigating the risks of political instability and could come in handy during the next pandemic. That includes issues like the purchase of medical equipment or information sharing. In the same sense, with the definition of what counts as a strategic sector expanding by the moment, governments in the region should discuss ways to resist pressure to embrace economic nationalism. Erecting barriers and limiting regional trade would unnecessarily prolong the economic crisis.
Regional cooperation on technical issues could even pave a way for broader collaboration within Latin America, a region riven by ideological differences and a lack of communication between heads of state. (Despite the crisis, the presidents of Brazil and Argentina have yet to speak on the phone, let alone meet in person.)
A key element will be for governments to prepare citizens for what is to come. Colombia’s economic minister was right not to mince words when he recently predicted that 2020 could be “the worst year in the country’s economic history.” During the pandemic — with a few exceptions, most notably Mexico and Brazil — leaders are likely to increase or maintain high approval ratings, especially where social distancing measures have been adopted and policymakers have been frank about the expected economic consequences, such as in Peru, Panama and Argentina. Peru’s President Martín Vizcarra’s swift response helped his approval ratings soar to 87%. In Argentina, Alberto Fernández now enjoys an approval rating of 80%.
In times of deep crisis, it is natural for people to search for a sense of protection and order. Political stability is therefore likely to be the norm in the short term. But once the pandemic subsides, the economic crisis is likely to make governing more difficult and, if history is any guide, lead to falling approval ratings, renewed mass protests, and leaders struggling to finish their terms.
People who joined Latin America’s new middle class during the 2000s’ commodity boom, and slid back into poverty during the 2010s, now realize that both they and their children are unlikely to escape poverty for years to come. A global recession, a wave of unemployment and limited government capacity to mitigate the crisis could thus lead to increased political instability — which would in turn make economic recovery far more difficult.
To make matters worse, many Latin American economies were already in intensive care before the pandemic, and few of the concerns that led to large-scale protests of 2019 have been adequately addressed. At the same time, the humanitarian catastrophe in Venezuela, which caused more than 5 million to flee even before the outbreak, is set to worsen and increase the number of refugees spread throughout the region — with the potential to further stoke nationalism and xenophobia.
With many presidents in the region still in the first half of their mandates — including Brazil’s Jair Bolsonaro, Mexico’s Andrés Manuel López Obrador, Fernández in Argentina, Colombia’s Iván Duque and Luis Lacalle Pou in Uruguay — most Latin Americans won’t have the chance to use elections as an escape valve to kick out unpopular leaders or search for more decisive ones at the ballot box. Ideological leaders like López Obrador and Bolsonaro, in command of Latin America’s two largest economies, may struggle to embrace the technocratic crisis management needed. Yet they may have no other choice: One of the positive aspects of the pandemic is that it will likely remind voters that expertise, experience and policymaking based on evidence and science matter a great deal, and can make a big difference in times of crisis.