Thu, Apr 23, 2020

Latin America vulnerable to commodity cycle

Shaping the Post-COVID World Together by Mathew J. Burrows, Peter Engelke

Coronavirus Latin America

São Paulo, BRAZIL- People are seen walking with protective masks to prevent coronavirus in the streets of São Paulo, Brazil on March 15, 2020.

The swift and aggressive actions taken by many of Latin America’s governments to curb the virus spread, which have included travel bans, border controls, quarantines, curfews, states of emergency, and more, have so far seemed to spare the region a full-scale crisis. 

Nonetheless, Latin America is not prepared once COVID-19 arrives—public health authorities have limited capacities; state budgets are tight; the region features many low-income people crowded into city slums, as in Brazil’s favelas.

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Moreover, the region also contains potential pandemic hot spots, notably Venezuela, which has been struggling with massive economic dislocation and dysfunctional governance—including a non-functioning public health system—for years.

Relative to Africa, however, Latin America’s prognosis appears brighter: the region has more middle-income and fewer low-income economies; with exceptions, national governments generally have more resources available, including domestic manufacturing capabilities; and although many urbanites live in slums, the percentages are nowhere near as high as in Africa, and the slums themselves are older (meaning they are closer to permanent settlements in terms of quality of physical structures and availability of public services, at least compared with the often-newer slums found in Africa).

For the region’s governments and global powers, specifically the United States, Europe, and China, the major questions involve the region’s post-pandemic economic recovery.

Many of Latin America’s economies remain overly reliant on the commodity cycle, which in turn means they are severely impacted by global recessions

Matthew J. Burrows, Atlantic Council

Although Latin America is not yet a competitive battleground between China and the United States, the degree to which the United States or China helps in its post-pandemic recovery could determine whether China’s influence increases at the expense of the United States’. 

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