Latin America: one of the worst affected by Covid-19

Etude économique

  • Argentina,
  • Brazil,
  • Chile,
  • Colombia,
  • Costa Rica,
  • Mexico,
  • Panama,
  • Peru
  • General economic

22 déc. 2020

Heavy dependence on informal labour markets and tourism exacerbates the Covid-19 shock

Of all emerging market regions, Latin America and the Caribbean (Latam) has been most affected by the Covid-19 pandemic, both in terms of infection and death rates, and regarding the impact on its economy. The outlook is highly uncertain and weighted down by growing fears of a new wave of infections. Rising prospects of multiple Covid-19 vaccines are definitively hopeful. However, the vaccine rollout is expected to move more slowly in the Latam region compared to advanced markets due to smaller vaccine orders so far relative to population and more logistical challenges. Therefore the economic benefits from the vaccine are expected to manifest first through the improving external environment as rollout across advanced markets boosts trade, commodity prices and external financing flows.

Key points

  • The pandemic has revealed structural weaknesses, which has made the region particularly vulnerable to the measures to contain the spread of Covid-19: border closures, travel bans, lockdowns and social distancing.
  • Hardest hit have been countries with a large informal economy, a high dependence on contact-intensive sectors such as tourism, and a low ability of working remotely.
  • More developed and diversified economies, particularly those that quickly restored access to international capital markets and had room for government stimulus packages, are more resilient.
  • Still, most countries in the region, including the more developed ones, needed emergency liquidity support and credit lines from multilateral agencies to deal with higher financing needs resulting from rising expenditures and falling fiscal and external revenues due to the Covid-19 crisis. One of the region’s long-term problem children, Brazil, stands out positively in this respect.
  • Latam’s economic recovery from the Covid-19 pandemic will be partial and uneven. It will be stronger in countries that have ample fiscal space to support their economies, as well as in those that have good institutional quality to help an effective rollout of vaccines. Meanwhile, recovery will be lagging in the tourist-dependent countries.

Documents associés

Avertissement

Les informations figurant sur ce site sont uniquement fournies à titre indicatif et ne doivent pas être utilisées à d’autres fins que celles mentionnées. Nous vous remercions de bien vouloir vous reporter aux réglementations et accords en vigueur. Aucunes informations ne peuvent être considérées comme créant un droit, une obligation ou engageant la responsabilité d’Atradius y compris pour juger de la moralité d’un ou de plusieurs acheteurs. Si Atradius juge de la moralité d’un acheteur, elle le fait pour le compte de son arbitrage et en aucun cas au bénéfice de ses assurés ou toute autre personne. En aucun cas, Atradius, ses partenaires ou sociétés apparentées, agents ou employés, ne pourront être tenus responsables envers les lecteurs ou toute autre personne pour toute décision ou mesure prise sur la foi des informations contenues dans cette carte, ou pour tous dommages indirects, particuliers ou similaires, même si ces personnes ont été avisées de l’éventualité de tels préjudices.