As prospects of a fifth wave have intensified in various part of the world, The Prisma launches a new series on the legacy of the first two yearsof the pandemic for the people and the economies of the region. The pandemic brought with it three distinct, yet related crises that kept feeding each other: the health, the political and the economic crisis exacerbated by high levels of inequality and informality.
In Latin America, the pandemic came at an inconvenient time: the region had enjoyed much reduced economic growth relative to the rest of the world, and it came at a time when social progress and gains in poverty and inequalities reduction had reached a plateau.
By the time Covid-19 hit the region governments had little headroom to fulfil their mission – protect their citizens from the illness and from the loss of livelihoods. The result was a more prolonged drop in economic activity: not only did economies grind to a halt in 2019, but they also contracted by 7% in 2020, making the region the worst impacted by Covid-19 in economic terms.
It is true that economies are recovering, yet the longer-term losses are probably more significant and socially damaging: the loss of education for millions of children, and the loss of livelihoods that will never return. The human toll of the pandemic will never be known with any precision.
And while the region is home to only about 8% of the world’s population, it accounted for 20% of global infections and nearly 30% of those killed globally by the pandemic.
‘Staggering inequalities’ have been found to be the core factor behind disproportionate Covid-19 death rates in the region, according to a joint report by Amnesty International and the Centre for Economic and Social Rights published in April this year.
In the region, more than 1.6 million people died of Covid-19-related causes as of May 2022. What is striking is that the most unequal countries in the region, such as Peru, Mexico, Brazil, Chile, Colombia and Paraguay suffered the highest mortality rates.
In addition, although 66% of the region’s population had been fully vaccinated by April 2022, vaccine hesitancy has been a challenge in many countries.
To say that Latin America paid a heavy price is an understatement. What the pandemic revealed is the weakness of the region’s economies and the ineffectiveness (and incapacity) of national governments. And it revealed those weaknesses in all their dimensions.
It is now clear that high inequalities and high levels of informality in work have caused more deaths, destroyed more livelihoods and caused more damage than the pandemic would have caused if those two factors had been addressed in the previous decades.
The political crisis, best evidenced through street protests that hit the region in 2020 and 2021, found its origin in structural political and economic factors common to all countries in the region: weak institutions, high levels of corruption, criminality and insecurity, high levels of inequalities and poverty – all feeding low levels of public satisfaction with the quality of democracy (LatinoBarometro, 2021).
During the pandemic, governments made use of authoritarian practices while low public health spending, low taxation and pre-existing budget deficits all combined to ensure the economic crisis would be particularly acute in Latin America, the most affected region in the world. For too long, they have been unsuccessful at collecting income through taxes; however, it is those taxes that fund public health and other public services. In the region only 22% of GDP is collected through taxes, against 30% for the OECD average.
As the economies in the region recover from the pandemic, this new series from The Prisma will take a look back at the human and economic tolls of the pandemic and assess the sustainability of the recovery process.
What role did long-standing inequalities play in this tragedy? How did the prominence of informal working practices contribute to the human and economic tolls?
And looking beyond the numbers we focus on those most significantly impacted by the pandemic – in particular women, informal workers, and the vulnerable.
The recovery in the region has been slower than elsewhere. In the context of the Ukraine war, presidential elections across the region and fast rising food and energy prices, how can the economic recovery be sustained? And could the pandemic act as a catalyst to (finally) address some of the long-standing issues that have marred the region for so long?
* Nicolas Forsans: Professor of Management and MBA Director at the University of Essex, UK. Co-director of the Centre for Latin American & Caribbean Studies and a member of many Latin American societies and think tanks, Nicolas investigates the economic and societal challenges in the region generally, and in Colombia more specifically.
(Next week: “The economic damage, a depressing picture”)
Latin America in a post-Covid world: The cost of inequalities