South America ‘hardest hit’ by Covid-19 economic fallout

People walk at a popular shopping street amid the coronavirus disease (Covid-19) outbreak in Sao Paulo, Brazil December 17, 2020.
People walk at a popular shopping street amid the coronavirus disease (Covid-19) outbreak in Sao Paulo, Brazil December 17, 2020. © Reuters - Amanda Perobelli

South America is heading for immense economic hardship after being hit hard by the Covid-19 pandemic, which has exposed the severity of economic inequality across the continent.


The United Nations Economic Commission for Latin America and the Caribbean (UNECLAC) presented a negative outlook for the region in a report published on December 11 that described South America as the “hardest hit” region in terms of “public health and economic development” during the coronavirus crisis.

After a “golden decade” in which a natural resources boom provided the funds to reduce economic inequality, South American GDP per capita sank at the end of 2020 to the same level as 2010.

The crisis has aggravated the effects of old problems in South America, notably a “weak and fragmented safety net”, said Alicia Barcena, the head of UNECLAC.

The longest lockdown in the world

Latin America and the Caribbean have recorded nearly half a million coronavirus deaths, including more than 185,000 in Brazil and 118,000 in Mexico, according to WHO data.

Argentina has registered more than 40,000 deaths from Covid-19. Yet its government was one of the quickest to institute a lockdown, imposing strict confinement measures on March 20. The lockdown was not lifted until November 8, making it the longest in the world. 

>> Indigenous groups in danger: Covid-19 threatens remote communities

In theory, closing the borders and imposing lockdown measures should have stopped the spread of the virus. Consequently, the failure of President Alberto Fernandez’s strategy to live up to its promises has left a bitter taste in the mouth of many Argentines. Some medical professionals in the country ascribed the high death toll despite the long lockdown to lax implementation of social distancing rules: “Is there isolation? There is none. Are there [enough] tests? No there aren’t,” Carlos Kambourian, a pediatrician in Buenos Aires, told Reuters in October.

“It’s been very hard to deal with the sense of disappointment, even if the lockdown spared the health service the worst,” said FRANCE 24's Argentina correspondent Mathilde Guillaume. 

The lockdown’s economic damage is severe, Guillaume continued. “We now see that many businesses will not reopen and one in 10 children has dropped out of school thanks to the absence of resources for the most disadvantaged. At the same time a devaluation of the currency looms, threatening to increase the cost of living even further.”

Confusion in Brazil

Debates about lockdown measures have been similarly intense in neighbouring Brazil. President Jair Bolsonaro has consistently minimised the severity of the disease, notably with his (in)famous declaration on April 28: “What do you want me to do? I am the Messiah (the meaning of his middle name) but I can’t work miracles.”

Bolsonaro’s insouciance did not prevent Brazil’s 27 states from imposing confinement measures. But the actions taken by regional and local governments diverged wildly from strict lockdowns to mere recommendations in a mosaic of policies.

Even within local authorities lockdown policies have sometimes varied. In Rio de Janeiro, the mayor decided on December 4 to close schools, while allowing shopping centres to remain open 24 hours a day to facilitate Christmas shopping.

Brazil’s GDP shrank by 9.7 percent in the second quarter of 2020, a bigger fall in output than those in the country’s previous nine recessions combined. More than 67 million Brazilians – mostly living in the country’s impoverished northern and northeastern regions – have been taking part in a monthly benefit programme costing around €47 billion. However, Bolsonaro vowed to end this plan in December – despite a warning from think-tank Fundacao Getulio Vargas that doing so could plunge some 15 million people into poverty. 

Peru, South America’s worst-affected country

Peru has the world’s highest coronavirus mortality rate per capita behind Belgium, according to data analysis website Statista. It is also facing one of the most severe economic shocks in the region; the IMF estimates that Peru’s GDP will have plunged by 14 percent by the end of 2020.   

Compounding the nation's challenges is the difficulty of distributing economic aid, since 70 percent of Peruvians work in the informal economy and 60 percent do not have a bank account. Former president Martin Vizcarra set a goal of ensuring that all Peruvian adults have an account by 2021, but the proportion of people with an account increased from 38 percent before the pandemic to just 40 percent in August.   

Vizcarra’s parliamentary antagonists impeached him in November, partly on the grounds that he allegedly mishandled the pandemic. But he was quick to impose a lockdown at the onset of the pandemic – on March 15, a mere nine days after Peru’s first confirmed case, and before many of the European countries where the virus was already surging.

Given the deep-seated problems Covid-19 has exposed in Peru, it would be difficult to argue that Vizcarra could have done much better, Colin Harding, a Latin American specialist and ex-correspondent in the region for various British newspapers, told FRANCE 24. “He followed the advice and locked down quickly – but then, of course, as soon as you start relaxing rules, the virus comes back with a whirl. And Peru has a pretty ineffective public health system; hospitals are poorly equipped and there aren’t enough of them. Vizcarra probably did the best he could with what he had.”

Hopes in Columbia centre on vaccines

Columbia, South America’s second-biggest country by population behind Brazil, has also been hit hard by the Covid-19 pandemic with more than 1.5 million confirmed cases and more than 40,000 deaths from the virus. President Ivan Duque announced a stay-at-home order for all Columbians aged over 70 on March 17. Three days later he imposed a month-long nationwide lockdown that was eventually extended nine times and ran until September 1.

The long lockdown precipitated Columbia’s worst recession since records began, with the country’s GDP tanking by 15.7 percent in the second quarter compared to the same period in 2019.

Colombia’s daily recorded Covid-19 cases hit a record 13,990 on December 19 – a day after Duque announced a deal with Pfizer and AstraZeneca to buy 20 million coronavirus vaccine doses. The country will receive 1.7 million doses of the Pfizer jab in February, the health ministry said, enough to inoculate some 850,000 people.

This article has been translated from the original in French.

Daily newsletterReceive essential international news every morning