Latin America’s Economies Need About a Billion Jabs in the Arm
(Bloomberg Opinion) -- The ruin that the novel coronavirus has visited on Latin America is hard to overstate. By almost any metric — 2.7 million companies shuttered in 2020, a 20% drop in investment, 44.1 million unemployed, 23.5 million projected to fall into poverty this year — the new report by the United Nations Economic Commission on Latin American and the Caribbean is a grim read.
After a year of unchecked infection and death, Latin America, with 8% of global population and 27% of the pandemic’s fatalities, is the developing world’s most indebted region. By the end of 2020, the region’s per capita income had collapsed to 2010 levels. “If Latin America flew through 2019 on a plane with one broken engine — income inequality, growing social unrest, political polarization, low productivity — the pandemic broke the other engine,” Eric Parrado, chief economist of the Inter-American Development Bank (IDB), told me.
Encouragingly, the prospect of mass immunization with medications ginned up at unprecedented speed offers a path to recovery. Look no further than the U.K., where all adults are expected to get the jab by June, and the United States, where accelerated vaccination is reviving the economy. In Latin America, sadly, the path to herd immunity is not just steep but fraught. Part of the blame falls to the classic chasm between rich nations, with dibs on the best shots, and poorer ones, who rely on the surplus of strangers. Yet homemade scourges also afflict the region. Feckless governments, logistical logjams, vaccine nationalism and political malfeasance all stand between the resurgent virus and Latin American shoulders, clouding any prognosis for growth and prosperity.
Forget a new commodities boom, the re-emerging Chinese juggernaut, emergency cash vouchers and paid work furloughs. Perhaps the greatest differentiating mark of Latin America’s economic fitness will be that left by the syringe.
The region has company. The World Bank last year forecast that an unchecked epidemic could heighten global food insecurity and push up to 115 million more people into extreme poverty — and that was before Covid-19’s second wave. Vaccine inequality will only worsen the toll. “The differing performance projections have much to do with the vaccine delivery timetable,” writes Harvard economics professor Kenneth Rogoff.
Although pharmaceutical companies are expected to turn out a staggering 12 billion doses of Covid-19 vaccine this year, the failure of sitting authorities to lock in supply deals and diversify manufacturers has condemned many nations to shortages and a perilously slow vaccine rollout. Complicating matters are new strains of the virus, for which current serums may offer limited protection. The faster the region can vaccinate, the better for lives and livelihoods, Fitch Ratings reported last month. “We are in a race between vaccine rollouts and a second and even third wave of Covid-19. For a solid recovery we need to win that race,” Parrado said.
Bolivians are struggling to bury their dead as the pandemic’s second wave besets the country amid dire vaccine scarcity. Once a practitioner of rigorous public health safeguards and aggressive emergency spending, Paraguay has since succumbed to soaring infection rates, critical shortages of emergency room medication and paltry vaccine doses, leaving the country prey to protests and a gaping public deficit.
But perhaps the varying fortunes of two higher-income nations tell the more compelling story of Latin America’s erratic pandemic policies. In Chile, where the novel coronavirus hit hard, unloved President Sebastian Pinera channeled his inner CEO and took vaccination seriously. Striking deals from China to the U.S. and U.K., Pinera’s government hedged its bets and sewed up delivery of doses by the tens of millions. The result: Chile has become the Israel of the Americas, with more than a quarter of the population already vaccinated; late last month, it overtook the U.S. in shots per 100 inhabitants. “Chile has an open economy, and lined up supply contracts on a pragmatic basis instead of playing favorites or deciding on ideological grounds,” said Fiona Mackie of the Economist Intelligence Unit.
That prescription also rescued Pinera from dismal ratings and spared him worsening public fury. Call it vax populi. The Chilean economy will be one of the region’s first to rebound strongly: Oxford Economics recently upgraded Chile’s 2021 growth outlook from 4.8% to 6.4%, said Latin America analyst Felipe Camargo.
Then there’s Brazil. Last Sunday, with the blessings of President Jair Bolsonaro, who deems masks are for the unmanly, convoys of his supporters took the streets to howl against lockdowns, social distancing and other communist conspiracies. Some contrarians made their point by brandishing weapons from the windows of their SUVs. Many of their compatriots, however, are clamoring for the right to bare arms. With more than 280,000 pandemic fatalities — 72,000 of them while awaiting a vacancy in intensive care — and skyrocketing infections, the government belatedly ditched its third health minister since the pandemic, muted the anti-vax shtick and has been scrambling for supply.
Among middle-income peers such as India and Mexico, “Brazil is the only country yet to outline a national vaccination plan,” according to the March 12 bulletin by the Solidarity Research Network, comprised of more than 100 Brazilian public policy experts. A record 54% of Brazilians now say they disapprove of Bolsonaro’s handling of the pandemic.
Notwithstanding the many ills of Brazil’s battered economy, the slow motion vaccine rollout is a killer. “The president and his team seem to be still pushing the view that it’s the economy versus health,” said former Brazilian Central Bank governor Arminio Fraga, who runs Gavea Investimentos. “It’s very clear the economy isn’t going anywhere until we can see the end of the pandemic.”
That diagnosis is devastating for a land that has seen per capita income fall to 2007 levels, says Marcos Casarin of Oxford Economics. Brazil and its neighbors can’t lift themselves from this hole without help. The United Nations has called for new cash injections, including an additional $56 billion in special drawing rights through the International Monetary Fund, to boost liquidity into fallen economies without increasing national debts. Yet economic healing will remain fleeting unless SARS-CoV-2 can be stopped. To that end, the IDB recently announced a $1 billion facility for Latin American and Caribbean nations to finance vaccine purchase and distribution. “The region is desperate for vaccines. I think the pharmaceutical companies know they are desperate.” IDB President Mauricio Claver-Carone said in a recent press call.
For now, recovery is a race between pathogens and vaccines. The challenge is not just one of speed and efficiency, but also of conviction. Even as most Latin Americans are eager to roll up their sleeves, fear, vaccine denialism and political pushback linger.
Silvio Antonio Favero is a cautionary tale. In February, the lawmaker from Mato Grosso, in western Brazil, sponsored a bill with his state legislature to ban obligatory vaccination. It was his last filing before falling ill, along with many of his fellow lawmakers, with Covid-19. Favero died on March 13 of complications from the virus. The bill was shelved.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Mac Margolis is a Bloomberg Opinion columnist covering Latin and South America. He was a reporter for Newsweek and is the author of “The Last New World: The Conquest of the Amazon Frontier.”
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