A close examination of the Latin America and Caribbean (LAC) region shows that decision making on responses to the pandemic has divided the region as they address the economic, health, social and political challenges. While states of the region are implementing steps to address the pandemic in the current state, there is also need for long term policy.
The COVID-19 pandemic has spread quickly affecting nearly the entire Latin America and the Caribbean (LAC) region. As of date, the region has reported more than two lakh cases and seven thousand deaths. Most countries of the region are working with the resources at hand to address the issues, with some nations such as Argentina and Colombia getting aid from the World Bank to support their respective COVID-19 task forces.
A close examination of the region shows that decision making on responses to the pandemic has divided the region into three sets of countries. First, countries such as Ecuador and Peru, that are responding as per World Health Organization (WHO) guidelines and have taken steps to stop all non-essential movement of people and goods, encouraged social distancing etc. Second are nations like Brazil and Mexico, where the federal government has decided against national lockdowns and the response is being led by the provincial governors, who have called for strict measures to minimise the spread and ‘flatten the curve’. The third set comprises of nations such as Cuba and Venezuela, that are responding to the crisis along the lines of the WHO recommendations but their efforts are hampered by sanctions imposed on them by the United States (US).
Challenges before the LAC region from COVID-19 pandemic
The COVID-19 pandemic poses certain interlinked challenges to the region. These are discussed below:
1. Economic Stress
Many estimates are being made about the potential impact of the COVID-19 pandemic on global and national economies. But exact numbers may be difficult to calculate as they will largely depend on how long the pandemic will last, the severity of social distancing restrictions on business, and the magnitude and effectiveness of governments’ stimulus packages. For the LAC region, the challenge is compounded by the fact that its economies have witnessed slow growth without fully recovering from the global recession of 2007-09. The imposition of lockdowns has brought economies to a standstill. According to the International Monetary Fund (IMF), the region is facing its worst recession since the 1950’s. A similar outlook is presented by both the World Bank and United Nations Economic Commission for Latin America (CEPAL) which has predicted ‘Latin America heading into "a deep recession" in 2020, with an expected drop in the region's Gross Domestic Product (GDP) of 1.8% to 4%. The region was already struggling economically, with feeble growth of just 0.1% in 2019.’
With the pandemic forcing another global economic slowdown, the economies of the region are bracing for slow growth over a prolonged period. The region is heavily dependent on exports. China, the largest trading partner for the region, and the US, the most important economic partner, both are facing economic headwinds. The European Union (EU) is also concentrating its efforts and resources within the Union. Global demand for the raw material and oil supplied by the LAC region has shrunk. The other major industry in the LAC region is the tourism and hospitality sector, which is predicted to face prolonged loss. The Caribbean islands may see a 25 percent contraction of the sector. 'To support their tourism sectors, countries may purposefully restrict outward travel and encourage local tourism as a substitute.’[ii] Nonetheless, for countries in which tourism is an important sector of the economy, this would not be enough to generate substantive foreign currency reserves or employment.
Economic Impact of COVID-19 Pandemic on Latin America and Caribbean
‘The greatest economic tragedy has been the impact on the informal sector (unregistered businesses) and employees who are not entitled to benefits, lacking social security since they work off the books.’[iii] ‘Countries have relied on direct transfers to vulnerable households (including an expansion of existing programs), relaxation of access requirements and expansion of unemployment insurance schemes, employment subsidies, temporary tax breaks and deferrals, and credit guarantees.’[iv]‘The challenge remains that governments might be unable to reach vulnerable households through traditional transfers.’[v]
ii) The Health Crisis
Most countries have underinvested in health which remains limited in coverage and access, particularly for the region’s poorest and rural populations. The region has a mix of private and public hospitals. Like elsewhere, hospital bed and respirator capacity is unlikely to meet enhanced demand. While testing for the virus is free in the public sector, given the scale of testing required, the private sector has to be involved to provide free or nominally charged testing. With the indigenous population of the region reporting cases, testing needs to be made more accessible. As stated above, a large number of people work in the informal sector without regular income and limited savings. They are also more likely to be living in cramped conditions all of which creates conditions for expanded virus transmission with limited financial means to afford healthcare needs.
It would also require considerable effort from the government to identify such worker to provide them with financial assistance. ‘For example, El Salvador, Argentina, and Chile, have all approved payments to low-income families or people employed in semi-formal or informal sectors, though the difficulty of distributing this support to people without bank accounts is a key challenge. Other countries have passed job-protection legislation, suspended utility payments and evictions, and enacted other measures to protect the poor and the middle class.’[vi] Food requirements might be easier to meet through NGO’s and the active participation of community kitchens.
The healthcare system in LAC region is largely dependent on women. According to the WHO, close to 46 percent of doctors and 86 percent of nurses in the region are women.[vii] They are under pressure to provide paid care to patients while also providing unpaid care work such as child care and care of the elders at home at a time when schools and childcare centres are closed. This is placing more stress on the system, which has routinely underpaid women workers and is also working to contain other diseases widespread in the region such as dengue.
iii) Social Challenges
The suspension of education activities to combat the virus has significantly impacted the learning process of the most vulnerable, as they have no or limited access to online resources through the internet. Nearly all primary education institutions also provide childcare and in some instances food. Given the widespread inequality in the region, this will impact overall care of children in many countries of the region.
Another related challenge is the growing role of drug gangs during the pandemic. Drug gangs have taken it upon themselves to enforce preventive lockdown in poor districts due to lack of government resources and in some cases political will to maintain the lockdowns. Security experts fear that this would increase the power of these gangs, showcasing them as powerful protectors of the people willing and able to do what the government cannot. Also, due to extreme poverty, all members of the family work, including the old. While the young work away or at great distance from home, the older generation works closer to home and look after the children of the family. In this situation, the death of the grandparents or caretakers, continuing economic hardship forcing the parents to work leaving the children unsupervised, could prove fertile ground for future recruitment by the drug gangs. Moreover, the lack of protection for the poorest members of society and the difficulties they face in obtaining basic essential goods will cause social unrest. ‘The crisis will put additional pressure on countries with limited fiscal space, endangering social spending, which is already strained after seven years of sluggish economic growth.’[viii]
iv) Political Challenges
The frequent contradictions between local authorities and central governments or among countries within regional integration blocs have resulted in a political crisis. In both Brazil and Mexico, populist leaders have been slow to respond effectively to the challenge. President Bolsonaro has disregarded the advice to self-quarantine even after members of his team tested positive for the virus. He has also threatened to dismiss his health minister for working with the provincial governors to impose restrictions on movement of people and goods. Similarly, President Obrador has conducted huge rallies and met people despite being cautioned against the same by his health ministry. The two leaders have dismissed the severity of the virus and rejected criticism of their responses to the pandemic. They have both reasoned that the economy of the nations would not be able to sustain a lockdown and the large number of migrant labours and informal sector workers require an open economy. Their popularity ratings are low and the number of positive cases is high. The lack of a federal response to the crisis has meant that provincial governors have responded in the manner they deem best, ensuring that the measures to contain the pandemic are not uniform. Brazil has the highest number of positive cases in the LAC region at 96,559 and 6750 deaths as on 04 May 2020, with Mexico also reporting high numbers (22,088 positive cases and 2061 deaths)[ix].
On the other end of the spectrum are countries such as Colombia (7285 cases and 324 deaths) and Costa Rica (733 cases, 6 deaths), that imposed border restrictions and limitations on the movement of people and goods, and other non-essential business and travel. Despite economic hardships, President Fernandez has stated that Argentina (4681 cases and 241 deaths) will follow all WHO recommendations. The island nations of the Caribbean have also taken steps to contain the spread of the coronavirus. The Dominican Republic leads the Caribbean with 7954 positive cases and 333 deaths. It has postponed its May presidential election to July and has extended its lockdown. El Salvador (490 cases, 11 Deaths), was one of the first countries to close its borders and take decisive measures even before a single case was reported. Despite imposing some of the most stringent quarantine measures, Peru has reported 42,434 cases and 1200 deaths, placing it just behind Brazil. A possible reason for the high numbers may be the mass movement of people from the urban centres to their hometowns as the government imposed strict lockdown rules. Bolivia (1470 confirmed cases, 71 deaths) has decided to indefinitely postpone its presidential elections after the resignation of President Morales in December 2019 and Chile (19, 663 cases, 260 deaths) has postponed a debate on constitution reform that was a key point raised by the protestors in previous months. All four nations have acted as per WHO guidelines, but the steps taken have led to concerns about militarisation of health security and possible abuse of power by heads of government in a time of crisis. ‘In fact, the crisis may pose long-term challenges for democracy in the region. Apart from the suspension of various rights, the possibilities for organised protest are diminished while the powers of the state are enhanced.’[x]
Cuba and Venezuela are battling the COVID-19 pandemic with the added disadvantage of sanctions imposed by the US. Cuba has reported 1649 positive cases and 67 deaths. The United Nations Secretary General António Guterres has appealed to the G-20 members to wave the sanctions. The two nations have applied the WHO recommendations but continue to face obstacles. ‘For Cuba, the decades old sanctions have restricted economic growth. The sanctions do not stop humanitarian assistance, however, they restrict Cuba’s ability of financial transactions and the export and import of materials. The issuance of licenses or clearance for exemptions take several months, which health experts’ fear is hampering the timely delivery of medical supplies and equipment to mitigate the spread of the virus.’[xi] Cuba, known for its highly qualified doctors, has sent medical teams to other nations including Venezuela and Bolivia within the LAC region and to Italy. Cuba is also working on developing COVID-19 vaccine.
Venezuelan economy is dependent on oil and therefore the slump in prices and demand hits hard. The sanctions by the US have blocked Venezuela’s access to international financial mechanism. The IMF has rejected Venezuela’s request for an emergency aid fund to fight the coronavirus. Similar to Cuba, humanitarian goods are exempted from US sanctions but companies and banks remain sceptical of working with their Venezuelan counterparts. The pandemic has not yet exploded in Venezuela which has reported 345 confirmed cases and 10 deaths. But with limited resources, access to clean water and medical equipment, and without international support, the healthcare system in Venezuela will be not be able to cope with a major outbreak.
The health crisis with distressed economies has pushed the LAC region to respond to the COVID-19 in varied manners. The region highlights three specific trends – first, two major countries – Brazil and Mexico- deal with a large number of cases without severe restrictions put on social activities with political leadership ignoring the advice of health ministries. Second, the majority of countries in the region, such as Argentina, Bolivia, Dominican Republic are fighting the virus with national resources, regional and international support from organisation such as CARICOM and IMF. Third, are the two ‘sanctioned nations’ of the region, Cuba and Venezuela. The two nations are cooperating with each other and have been able to limit the number of coronavirus positive cases. While the cases in the two nations are limited, Venezuela in particular would be severely constrained if the virus spreads.
Regional initiatives have also taken root, such as the CARICOM members working together to ensure that member states have all necessary food and medical supplies. MERCOSUR (Argentina, Brazil, Paraguay and Uruguay) ‘has approved the sum of US$ 16,000,000 for the multinational project “Research, Education and Biotechnologies applied to Health,” which will support the coordinated fight against COVID-19. This is in addition to US$ 5,800,000 provided to reinforce the capacity of diagnosis of the virus with the purchase of equipment, supplies, material for the protection of the operators and kits for quick detection.’[xii] These initiatives are limited in nature to a few countries and the most vulnerable continue to face an uphill task.
The region is fighting the COVID-19 pandemic with all its resources and to a large extent, has been able to contain its spread. Nonetheless, the virus has the potential to spread quickly and unexpectedly and the varied responses from the leaders of the region have posed a hindrance for an effective regional response. While States of the region are implementing steps to address the pandemic in the current state, there is also need for long term policy. In this situation, the LAC countries would have to rethink their healthcare system and address the existing inequalities so that the poorest are able to better protect themselves against any future health crisis. They would also have to the address the social economic impact of the pandemic.
* Dr. Stuti Banerjee, Research Fellow, Indian Council of World Affairs.
Disclaimer: Views expressed are personal.
Agence France Presse, “U.N. predicts 'deep recession' in Latin America due to virus,” https://www.rappler.com/business/257095-united-nations-predicts-deep-recession-latin-america-2020-coronavirus#cxrecs_s, Accessed on 19 April 2020.
[ii] Alexey Kravchenko, “ The Future of Tourism post Covid-19,” https://www.unescap.org/blog/future-tourism-post-covid-19, Accessed on 20 April 2020
[iii] Jerry Haar, “Challenges for Latin America and the Caribbean in Confronting the Coronavirus,” https://latintrade.com/2020/04/07/challenges-for-latin-america-and-the-caribbean-in-confronting-the-coronavirus/?v=c86ee0d9d7ed, Accessed on 19 April 2020.
[iv] Alejandro Werner, “Economic Policy in Latin America and the Caribbean in the Time of COVID-19,” https://blogs.imf.org/2020/04/16/economic-policy-in-latin-america-and-the-caribbean-in-the-time-of-covid-19/, Accessed on 19 April 2020
[vi] Linnea Sandin, “COVID-19 Exposes Latin America’s Inequalities,” https://www.csis.org/analysis/covid-19-exposes-latin-americas-inequality, Accessed on 20 April 2020
[vii] World Health Organization, Gender Equality in the health Workforce: Analysis of 104 Countries 2019,” https://apps.who.int/iris/bitstream/handle/10665/311314/WHO-HIS-HWF-Gender-WP1-2019.1-eng.pdf?sequence=1&isAllowed=y, Accessed on 20 April 2020
[viii] ECLAC, United Nations, “Latin America and the Caribbean and the COVID-19 pandemic Economic and social effects,” https://repositorio.cepal.org/bitstream/handle/11362/45351/1/S2000263_en.pdf, Accessed on 20 April 2020
[x] Charles T. Call, “As Coronavirus hits Latin America Expect Serious and Enduring Effects,” https://www.brookings.edu/blog/order-from-chaos/2020/03/26/as-coronavirus-hits-latin-america-expect-serious-and-enduring-effects/, Accessed on 20 April 2020
[xi] Peter Kornbluh, “Covid-19: Cuba Deserves Relief From US Sanctions,”https://www.thenation.com/article/world/coronavirus-cuba-sanctions-aid/, Accessed on 05 May 2020