A UNECLAC report (March 2021) said an additional 22 million people fell into poverty as unemployment increased in the region.
After more than a year of the Covid-19 pandemic, it is well established that the shortage of effective pharmaceutical treatments has overwhelmed national health systems. As a result, governments have had to allow non-pharmaceutical interventions (NPIs) such as blockades and movement restrictions to contain its spread. There is still a lot of ambiguity and lack of clarity on the dynamics of Covid-19. Studies, however, indicate that non-pharmaceutical interventions have been necessary but at the same time have had a negative socio-economic impact.
In Latin America, Brazil was the first country in the region on February 25, 2020 to report the disease in Sao Paulo, followed by Ecuador on February 29. As of mid-April 2020, more than 65,000 cases of Covid-19 were recorded in Latin America. This number is constantly increasing. It was reported that the streets of Guayaquil, the economic hub of Ecuador, had corpses left there for days due to the city’s limited capacity to cope. As of May 25, 2021, more than 449,858 people have died from the pandemic in Brazil alone, according to the John Hopkins University Coronavirus Resource Center. Countries in the region have had widely divergent political responses to the pandemic. While some countries like Argentina announced immediate restrictions, other countries like Brazil did not support NPIs. Reports by Brazilian President Jair Bolsonaro openly announcing that he would not sanction a national lockdown, with the backing of his supporters, once again made headlines. At a large rally held for him in early May 2021, many of his supporters raised the slogan “Autoriso Bolsonaro” (“I authorize Bolsonaro”). Bolsonaro’s argument and the reasons for avoiding serious steps towards a national lockdown are based on protecting the economy. This has been disputed by its opponents who point to the increase in deaths and the state’s inability to tackle the problem with a crumbling healthcare system.
For emerging economies, the non-pharmaceutical interventions (NPI) to help prevent the outbreak of the pandemic that were put in place in 2020 as well as the decline in commodity prices have resulted in current account deficits and reduced flows. of capital. Before the Covid-19 eruption, Latin America was one of the slowest growing regions among developing countries. At the start of the 21st century, the demand for raw materials from Asia (especially China) had inflated the prices of raw materials, but this trend was reversed accompanied by a massive flight of capital and an influx of capital. sluggish capital. In March 2020 itself, Brazil, Colombia and Mexico experienced a US $ 15 billion capital flight as oil, coal and zinc prices fell drastically and low-wage workers and labor. The informal sector suffered the most as they were hit the hardest, with welfare states slowly losing their grip.
With the onset of the pandemic, the International Monetary Fund in its World Economic Outlook (April 2021) gave an estimate of 7% economic contraction for the Latin American region in 2020. Along with the decline in the economy trade, travel and tourism, a report (March 2021) said an additional 22 million people fell into poverty as unemployment increased in the region. Most Latin American countries have a large informal economy. For example, a middle-income country like Colombia has almost half of its population working in the informal economy, which has been hit hard by economic restrictions. These people live in informal settlements, which also makes them difficult targets for government grants and services.
The spread of Covid-19 along with restrictions, a weak police force, and disruption of trade and product supply chains have dangerous implications for society. While crime, violence and homicide apparently declined in the first few months of the pandemic, it was very short lived. New waves of violence have erupted in the region, with organized crime taking advantage of a weakened system to expand its influence.
This means that policies to address current problems in Latin America will need to take into account that it is small businesses that employ around half of the workforce, but it is the larger, more established businesses whose workers contribute. to a large part of the national income. It is the recently unemployed and independent workforce in the informal sector that needs help with targeted and effective cash transfers. Are existing government programs (such as cash transfers) able to respond quickly and in a targeted manner? Can these programs target the individuals most affected by the economic consequences of the non-pharmaceutical interventions put in place to slow the spread of Covid-19? The problem governments have faced is that those who really need this assistance may not benefit from existing programs. Another alternative proposed by a report released by UNECLAC on May 12, 2020 recommended temporary cash transfers by governments, suggesting a universal basic income to guarantee the right to survive.
The socio-economic repercussions not only of the disease but also of government policies must be anticipated in advance and the projections of its implications clearly defined. Governments must therefore reflect and rethink their policy responses. Short-term incentives such as lending to small businesses providing credit or assistance and social services must go hand in hand with strategies that address long-term economic recovery with innovative and sustainable technology. The Latin America and the Caribbean region with its abundant resources has enormous economic potential and a modest recovery for the region is expected this year, but special attention needs to be paid to the way forward. Multilateral regional cooperation with a mix of non-pharmaceutical and pharmaceutical interventions is a step towards the long healing process that awaits us.
Priti Singh is Associate Professor at the Center for Canadian, US & Latin American Studies, School of International Studies, Jawaharlal Nehru University, New Delhi.