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Coronavirus will Shrink Latin Economies

Updated: Jul 21

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. The number of coronavirus cases in the Latin American and Caribbean region has now surpassed 3 million. The region is the current epicenter of the pandemic, having reported more than 3,010,000 cases and 133,000 deaths.   



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 as 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 delay 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 a 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.

Colombia’s lockdown will continue until Aug. 1, President Ivan Duque said in a broadcast late Tuesday. 

In municipalities that have a low number of coronavirus infections, pilot programs will begin to test the reopening of restaurants, barbershops, and theaters, Duque said. 

Colombia has reported more than 120,000 cases and 4,452 deaths.

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.


Brazil accounts for more than half of the region’s COVID-19 cases. 

The World Health Organization (WHO) said Tuesday that Brazilian President Jair Bolsonaro testing positive for the coronavirus shows that everyone is vulnerable and "exposed" to the disease. 

"Nobody is special. We are all potentially exposed, and we are all equally vulnerable," said the WHO's director of health emergencies, Mike Ryan.  

Bolsonaro has been one of the few world leaders to downplay the pandemic for months. 

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.


Bolivia 

In the Bolivian city of Cochabamba, relatives of a man who died from the coronavirus left his coffin in the street for several hours to protest difficulties in getting him buried. People are trying to draw attention to the drama involved in waiting for days with the bodies of loved ones at home without the family being able to bury them because of overwhelmed cemeteries and crematoriums.  

The country reported more than 40,000 COVID-19 cases and 1,476 deaths as of Tuesday. 


Summary:


Latin America and the Caribbean has become a hotspot of the coronavirus (COVID-19) pandemic, exacerbated by weak social protection, fragmented health systems, and profound inequalities. COID-19 will result in the worst recession in the region in a century, causing a 9.1% contraction in regional GDP in 2020. From: https://reliefweb.int/report/world/policy-brief-impact-covid-19-latin-america-and-caribbean-july-2020


Coronavirus (named COVID-19) has spread to all 36 countries and territories in Latin American and the Caribbean, upending the lives of children and their families across the region. This pandemic is as much a health crisis as a social and economic threat, creating extremely challenging situations, particularly to the most vulnerable. The impact on children and their families will be devastating, with illness, isolation, fear, and loss of livelihoods. From: https://www.unicef.org/lac/en/reports/impact-covid-19-children-and-families-latin-america-and-caribbean

Source: https://www.nordeatrade.com/fi/explore-new-market



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