The challenging economic situation caused by the COVID-19 pandemic in Latin America could worsen if governments in the region fail to manage the events tactfully, say economists surveyed by Reuters.
Most of the countries have imposed stringent travel restrictions in response to rapidly-spreading coronavirus, but the lockdown has left businesses struggling to stay afloat.
Brazil’s economy is at a standstill, and Mexico is already in recession, with the sharp fall in commodity prices adding salt to their wounds.
The outbreak of COVID-19 has frightened people in Brazil, where several senior government officials are also among those infected. Economists polled by Reuters say Brazil could register zero percent growth in the ongoing fiscal quarter.
Mexico’s recession is likely to deepen, with economists expecting the economy to contract 3% during the current quarter.
Mexico is not only lagging in enforcing social distancing measures, but it is also yet to announce stimulus actions. Therefore, analysts say, the Mexican economy may shrink to 2008-2009 levels.
The “fiscal outlook could become a problem,” says the report, pointing to the growing protectionism in both the countries.
Last week, Brazil’s President declared a national emergency, allowing the government to waive fiscal targets and free up budget resources. However, the country’s widened fiscal deficit leaves little room for President Jair Bolsonaro to maneuver, say the economists.