Latin America June 05, 2020 / 06:06 pm UTC

LatAm COVID-19 Update: Some Light at the End of the Tunnel

By Priscila Robledo, Pedro Tuesta

Bottom line: There are early signals that the situation has started to stabilize in Chile and Peru, which have more cases per capita than any other country in LatAm. We hope the trend keeps up and does not become another false dawn. New cases continue to rise in Argentina, Colombia, Brazil and Mexico, which is concerning, as social-distancing restrictions are easing in these countries. 

Figure 1: Incipient Stabilization in Chile and Peru (Daily Confirmed COVID-19 Cases, 5-day Average)

Source: Datastream, Continuum Economics

A Light at the End of the Tunnel for Chile and Peru?

As we have said previously, the information on confirmed cases is only useful to grasp an idea of the speed of the contagion and not the extent of COVID-19's spread. This is because of the large variability of testing within the region makes comparisons between countries misleading.

There might be light at the end of the tunnel in Chile and Peru, as the speed of daily new cases appears to be slowing (Figure 1). In Argentina, Colombia, Brazil and Mexico, on the other hand, new cases continue on the rise. This is particularly concerning considering that governments are starting to ease social-distancing measures and the population is growing restless from both the confinement and lack of income.

No Good News in Mexico and Brazil

Daily deaths offer a less biased comparison between countries, though it has the disadvantage of being a lagging indicator. Argentina and Colombia continue to have the situation relatively under control, but the rate of new cases sends a signal that they cannot rule out future problems. In the most problematic countries, namely Brazil, Peru, Mexico and Chile, there are no clear signs that death rates are stabilizing, although Chile and Peru can expect some improvement soon. 

Figure 2: Daily COVID-19 Deaths per Million (5-day Average)

Source: Datastream, Continuum Economics

There are still no green shoots in Mexico and Brazil, the two LatAm countries that we are the most concerned about. Indeed, mobility in retail and recreation has been increasing in most LatAm countries, including Brazil and Mexico, which only increases concerns. In both countries, some officials are concerned about the direction of the pandemic, but any further action depends on the presidents.

The Economies of Brazil, Chile and Mexico Have Not Bottomed Out

Increased mobility in the workplace in Colombia and Peru gives hope that, barring a worsening of the COVID situation, economic activity could have bottomed in these countries. Mobility in the workplace has also increased in Argentina, although we are not hopeful that its economy has hit a bottom, as the use of interventionist policies to limit the economic consequences of the pandemic will delay the impact. 

Mobility in the workplace has been decreasing in Brazil, Mexico and Chile, which suggests that activity has not bottomed out yet in those countries. Keep in mind that, compared to other LatAm countries, mobility in the workplace did not fall much in Brazil and Mexico, and therefore, the scope for a further downturn is larger.

Figure 3: Mobility Has Generally Increased in Retail and Recreation (LHS), but Not in the Workplace (RHS)

Source: Google Mobility Report. Note: Data compare mobility on the dates specified on the chart with the median value for the corresponding day of the week from January 3–February 6. Outliers in Argentina’s and Colombia’s values on May 25 are due to national holidays. 

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Analyst Certification
I, Priscila Robledo, the lead analyst certify that the views expressed herein are mine and are clear, fair and not misleading at the time of publication. They have not been influenced by any relationship, either a personal relationship of mine or a relationship of the firm, to any entity described or referred to herein nor to any client of Continuum Economics nor has any inducement been received in relation to those views. I further certify that in the preparation and publication of this report I have at all times followed all relevant Continuum Economics compliance protocols including those reasonably seeking to prevent the receipt or misuse of material non-public information.