Coronavirus Surges In Latin America

Latin America

Confirmed cases of coronavirus, and the number of related deaths, are growing at a faster rate in Latin America than in the United States and most other regions of the world. Last month, the number of confirmed cases multiplied by seven and the number of deaths by seven and a half.

In the region’s two most populous countries, Brazil and Mexico, cases increased tenfold. Within a couple of months their numbers may reach those of the United States. Given the movement of trade and people, the situation of Brazil – which shares borders with seven large countries plus Suriname and French Guiana – carries the greatest weight in South America. Mexico is the most relevant for North America.

Testing continues to lag when compared with more developed regions, and – hardly surprising – the growth in confirmed cases per million inhabitants correlates almost perfectly with the increase in testing. In the last month, both increased by a factor of three. But in Brazil and Mexico, deaths per million increased fivefold. Mexico continues to show many fewer cases than Brazil; its test rate is half that of Brazil, which may explain part of the difference.

The three Latin American countries with the most confirmed cases are also those whose economies are most integrated with China’s: Brazil, Peru, and Chile. But other countries such as Uruguay that also count China as a major trading partner have very few confirmed cases. More than trade figures, we should look at travel to and from Wuhan, where the virus originated, and travel to and from other cities where the pandemic hit hardest, such as New York, Madrid and London.

Heat, as I have mentioned in a previous article, plays a role, as most epidemiologists believe that the virus will spread less easily in hot and humid weather. Chile, in addition to having the highest trade integration with China, has by far the coolest average temperature in the region – 8.45 degrees Celsius, or similar to the U.K. Chile now has the highest number of cases per million inhabitants in Latin America, around 4,000 – also very similar to the U.K. But heat is not everything: as I write this, Mexico City, Rio de Janeiro and São Paulo, despite having similar temperatures, have very different numbers of reported cases. Guayaquil, Ecuador – which unlike Chile has very high heat and humidity – also has very high levels of COVID-19 infections.

In many countries the credibility of the figures comes into play. I still do not regard the information coming from Nicaragua and Venezuela as reliable. Several investigative articles make the argument that Mexico is undercounting the numbers of cases and deaths. When it comes to testing, Mexico ranks near the bottom in the region in tests per million inhabitants. It ranks last when compared with Latin America’s most populous countries. With this in mind, it is reasonable that the United States and Mexico decided to extend travel restrictions for another 30 days.

In the past month, President Jair Bolsonaro of Brazil has been the most frequent target of criticism. As I mentioned in a piece soon after his electoral victory, he was able to win thanks to a coalition of groups and movements with very different ideologies. Bolsonaro’s atypical response, or lack of response, to the pandemic created sufficient distractions and additional criticism for many internal battles and disputes to erupt among the groups of his coalition. After the resignation of the Minister of Justice, Sergio Moro, the waters did not calm down. Bolsonaro dismissed his Minister of Health. Investigations and counter-accusations abound. Current and past government officials trade blows on a daily basis. Given Brazil’s importance for the region, these disputes deserve a separate analysis. My point here is that reactions to crises like the current pandemic cause political changes and opportunities, and Brazil is where I see the most turmoil.

Cases in Brazil continue to climb, approaching 1,800 per million inhabitants. In related deaths Brazil now has the second highest rate in Latin America. Ecuador has the highest death rate with 182 per million inhabitants, while Brazil has 111. With this growth in mind, President Trump decided over the weekend to impose temporary restrictions on travel from Brazil to the United States. In the effort to maintain cordial relations he also approved donating 1,000 ventilators to Brazil.

In my last two pieces about COVID-19 in Latin America, I focused mostly on Brazil and Mexico. Together they have greater GDP and population than the rest of Latin America combined. But it would be unfair to overlook the efforts of some countries where government and civil society have been able to contain, and perhaps will soon beat, the pandemic. One of these countries is Uruguay, which reports only 227 cases and 6 deaths per million inhabitants.

I spoke with Pablo Viana, an Uruguayan congressman and cofounder of the regional think tank FREE, regarding the reasons for Uruguay’s success. For Viana, Uruguay has been helped by a culture that has “huge respect for citizens’ freedoms and for relying on their responsibility. After the first outbreaks and the growth in cases, the government declared a health emergency and urged the population not to leave home. It was an exhortation, not a mandate. The government relied on a technical team which included virologists and mathematicians to map the projections to flatten the curve.” Viana continues, “The Uruguayan parliament created a Coronavirus Fund, which was funded with the proceeds from the reduction of the salaries of public employees and state officials. The government abstained from imposing additional, emergency taxes on the most productive sectors, with the hope that they would lead the recovery. In an unprecedented step, the administration postponed tax collections and opened a line of credit for small and medium enterprises. All these measures were unanimously approved by Congress.”

Uruguay’s neighbor Brazil is now regarded as the center of the pandemic in Latin America and is its second largest trading partner, after China. Brazil’s woes will certainly impact Uruguay. But the more cohesive civil society and the good leadership of President Lacalle Pou and his team give them an opportunity to shine in the darkness. I have written that Uruguay has the potential to become the New Zealand of Latin America. The way in which it has dealt with the coronavirus shows that this is not an impossible dream.

My columns focus on business and policy, so the goal of my analysis is to try to assess what will happen economically rather than find a perfect algorithm of all the factors that affect the spread and containment of COVID-19. From a free-economy perspective, the best possible outcome would be to see a move towards deregulation, lower taxes, and continued trade flows. One big question is China. If the leaders of the major Western economies decide to begin cutting trade ties with the Asian giant, can Latin American producers capture part of that market? Mexico and Brazil would have the greatest opportunity in this regard. It is uncertain, however, how they will emerge from this pandemic and how they will resolve their internal problems. A reversal of Brazilian economic reforms – reforms that I consider the most positive element in Latin American economic scene over the past year – would be a major disaster and likely create more victims than the virus itself.

Joshua Gregor jgregor@acton.org contributed with research for this piece

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