Experts painted a grave picture of the impact of COVID-19 in Latin America at an Aug. 5 webinar. This region has rapidly become a global hotspot of COVID-19 as home to 25% of the world’s victims and cases spiking at alarmingly high rates.
The event, which was hosted by the Stanford King Center on Global Development and the Stanford Center for Latin American Studies and was moderated by Alberto Díaz-Cayeros, a Stanford King Center faculty affiliate and director of the Stanford Center for Latin American Studies.
While Latin America has had some national success stories, including Uruguay, which has under forty recorded deaths from the virus, “there are three countries, Brazil, Mexico and Nicaragua, that pursued a policy which denied the gravity of the situation, putting the lives of these countries’ populations at serious risk,” said Nora Lustig, professor of economics at Tulane University.
According to Julio Croda, former chief of the department of communicable diseases in Brazil, dismissive leadership led to “an excess of death, including in some cities which have reached a 20-25% excess mortality rate.” Croda noted that the majority of the infections and deaths in Brazil affect the poor, indigenous and Black communities, highlighting the unequal effects of COVID-19 on the “most vulnerable and least valued” segments of the population.
The pandemic has wiped out “about a decade of inequality and poverty progress” in Latin America, Lustig said. “We have to be very concerned about the impacts of this pandemic on the human capital of today’s children, because nutrition, healthcare and education are probably going to suffer significant negative shocks which will impact inequality in the future.” She warned that “we’re sowing the seeds for more inequality in the future if we do not protect today’s human capital.”
The effects of the pandemic on the economy, healthcare and education systems in Latin America have been exacerbated due to overwhelmed and underprepared health systems, a range of pre-existing inequalities, and a lack of clear and unified government messaging, according to the panelists. A July 2020 report by the United Nations explains that COVID-19 will result in the worst regional recession in a century, causing a 9.1% decrease in regional GDP by the end of this year.
Many countries in Latin America are more exposed to the economic shocks of the pandemic than the U.S. due to the structures of their economies. Marcela Eslava, economics professor at Universidad de Los Andes said that “50 to 60% of jobs in Latin America are directly exposed because they are in non-essential sectors, or sectors that cannot telework.”
This exposure has dangerous ripple effects as it creates a demand shock from people who are no longer participating in the market economy during lockdowns. She also noted that Latin American countries’ labor and market regulations, informal and less flexible job markets, and technology access, among other factors, further complicate the issue.
Especially troublesome for Latin American economies during the pandemic is the limitations presented by their occupation structures. Eslava explained that, “over 40% of people are self-employed in Colombia versus less than 15% in the U.S.”
“Over 70% of people work in firms with less than 10 employees, as compared with less than 20% percent in the U.S,” she said. “Many more people can telework in the U.S. than in Colombia.”
“If we were to compare Peru, Bolivia, Brazil, or any other country in the region,” with the U.S. “you will see the same situation,” she added.
Large-scale social programs may be the solution, including cash transfer programs which have reached over 25% of Brazil’s population, staving off further tragedy. Another fiscal response discussed was Universal Basic Income (UBI). However, Eslava noted that a flaw with UBI is that it wastes money on the upper class, as “you use resources that you would spend on giving a transfer to the poor on those who don’t need it.” Instead, Elsava recommended a Guaranteed Minimum Income for all citizens, alongside tax reforms that allow for true redistribution.
The impact of coronavirus in Latin America will also have profound long-term effects. Economic turmoil in the region is expected to lead to wider gaps in social protection systems, rises in malnourishment and preventable or treatable diseases, as well as educational shortfalls that cannot be recovered. In an interview with The Daily, Lustig cited historical data that demonstrates some of the generational consequences of health crises, as individuals in utero during the 1918 pandemic were “worse off according to every single indicator. They had higher disability rates, lower wages, lower life expectancy and more.”
“It is feared we will see the same trends for 2020,” Lustig said.
This article has been updated to clarify Nora Lustig’s position at Tulane University.
A previous version of this article misquoted a statement from Nora Lustig; “there are three countries, Brazil, Mexico and Colombia, that pursued a policy which denied the gravity of the situation and undermined what the health ministries were doing, therefore endangering the rest of the region” has been changed to “there are three countries, Brazil, Mexico and Nicaragua, that pursued a policy which denied the gravity of the situation, putting the lives of these countries’ populations at serious risk.” The Daily regrets this error.
Contact Jack Murawczyk at dmurawczyk23 “at” csus.org