How is Covid-19 accelerating structural changes across Latin American economies?
Argentina | Economy
One of the last regions in the world to be affected by the Coronavirus pandemic, Latin America's reported Covid-19 case and death numbers have grown steadily since late February. However, given the importance of the region's economies to global value chains, the need to ensure the continual operation of key services and industries has led to a number of key measures being implemented in a number of countries. While these efforts were initially focused on keeping essential supply chains open, they may result in the inadvertent acceleration of structural changes in these economies, particularly in relation to digitalisation.
Government responses across the region- in terms of both public health and macroeconomic policies- have also been varied. From Mexico- whose president was initially reluctant to implement strict lockdown measures and action a comprehensive fiscal stimulus package- to Peru, which moved swiftly to lock down, close its borders to travellers, and provided an economic stimulus equivalent to around 12% of GDP. There are geopolitical implications from this too, as countries such as Mexico and Colombia could stand to benefit from rising tensions between the US and China as well as a potential move from many global manufacturing firms to relocate more of their supply chains closer to the US. As with other emerging markets, the economic and social impact of the pandemic is likely to be damaging to the region's economies. However, these resulting structural changes may eventually lead to some benefits in the long run by allowing Latin American economies to become more competitive on a global scale.