Latin America and the Caribbean, the region where the coronavirus has caused the worst economic devastation and more than a quarter of deaths globally, is now undergoing a slow vaccination campaign.
Political conflicts and production bottlenecks hamper Brazilian vaccination initiatives; Mexico struggles to get more doses as India’s death toll surpasses; Colombia began giving vaccines only last week.
There is a risk that such slowness, coupled with recently The increase in casualties is hampering the economic recovery And it is really slow.
“If vaccination and public health policy fail to reverse the trend we’ve seen in recent months, it is clear that this recovery is in danger,” Alejandro Werner, director of the IMF’s Western Hemisphere Department, said this month.
The economic recovery in Latin America was already faltering after a new round of lockdown measures imposed in response to a surge in cases that began near the Christmas holidays. Since January, JPMorgan Chase & Co. Lowered first-quarter growth forecasts from Argentina, Brazil, Chile, Colombia and Mexico, In reference to concerns the increasing number of cases and new restrictions.
The region shrank by more than 7% last year, according to the International Monetary Fund, the largest decline in the world. The fund does not believe that production will return to pre-epidemic levels until 2023, and this year has made a difficult start.
In December, Brazilian retail sales suffered the biggest drop on record in December, indicating a sharp slowdown in Latin America’s largest economy. Meanwhile, Mexico’s recovery has lost ground, with growth slowing from 12.1% to 3.1%. In the last two quarters of 2020.
Chile stands out positively
Activity is expected to start later this year, but a strong recovery hinges on increased availability of vaccines in the coming months. Effective deployment of vaccines matters a lot, and investors are already rewarding the only successful case from Latin America to date: Chile, which is on track to vaccinate 75% of its population in just six months, according to Bloomberg’s Vaccine Tracker.
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This month, Moody’s Investors Service and Spain’s Banco Santander revised their forecasts for Chile’s growth, further pushing it away from its neighbors. Its economy will return to pre-pandemic levels three to six months earlier than most other countries in the region, according to Nikhil Sangani, an economist at Capital Economics in London. The Chilean peso led the advance among its regional peers, up by more than 3% so far this month.
Other countries in the region don’t even come close. At the current rate, It takes two and a half years for Brazil to reach the 75% vaccination level, This is the threshold that experts consider necessary to return to normal life. It will take Mexico 3.6 years and Argentina more than a decade. In contrast, the United States is expected to achieve herd immunity by the end of the year.
Sangani said that prospects could improve in the coming weeks as some of the initial problems with the vaccine launch begin to recede.
Delays in the delivery of treatments have forced countries that rely heavily on special vaccines, such as Mexico and Colombia, to sign last-minute contracts with competitors. Argentina is trying to produce more domestically.
After months of delaying the request, Brazilian President Jair Bolsonaro’s administration ran out of doses to continue the vaccination campaign, prompting nine state capitals, including Rio de Janeiro, to suspend efforts.
But not all delays in vaccination efforts are self-made. From the start, poorer countries have replaced wealthier ones that quickly concluded deals with pharmaceutical companies.
Much of the Caribbean and Central America are still weeks away from starting their campaigns. Jamaican Prime Minister Andrew Holnes last month accused rich countries of “hoarding” vaccines.
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Economists watching mobility trends are bracing for another blow to activity due to more lockdowns and closures in trade. Leaving aside Chile, they are still skeptical about easing restrictions from the rest of the region due to its slow start and remoteness from major vaccine distributors.
“The richer countries are already starting to buy as much as they can, leaving only bread crumbs for the rest,” said Joan Domaine, an economist at Oxford Economics Ltd., based in Mexico City.