Do Not Be Fooled by Mexico and Argentina’s Slower Contagion Spreads of Late
Daily tests have declined sharply since late July in Mexico and since mid-August in Argentina (Figure 1 & 2). The same may be happening in Brazil, but the country has not provided data since late July. Meanwhile, much of the increase in Colombia’s confirmed cases may be reflecting that the country is moving away from extremely low testing to more proper levels (Figure 4).
We have long been warning that cross-country comparisons of contagion levels are misleading because of the huge differences in testing. This is apparent when we compare the positive testing rate (i.e., the share of COVID-19 tests that are positive). In the latest reported data, Mexico and Argentina had a positive rate of 63% and 59%, respectively, while Colombia’s rate was at 30%.
The WHO has suggested that a positive rate below 10% indicates the country is doing enough testing, adding that sub-3% levels are the most desirable. At 7%, Chile is the only major LatAm country with a positive-test rate that suggests it is doing enough testing. From what we know, Brazil does not report this indicator.
Declining daily testing rates in countries that already have extremely low rates of testing suggests that, on top of avoiding comparisons of the levels of contagion across countries, trends in new cases also ought to be taken with many grains of salt. The fact that, aside from Chile, no LatAm country is showing a clear reduction in COVID-19 deaths confirms that, without proper testing, contagion data are flawed.
Figures 3 & 4: Chile and Colombia Have Much Better Testing Rates Than Mexico and Argentina (Per Thousand, 7-Day Rolling Average)
Source: OurWorldInData, Datastream, Continuum Economics
A Vaccine Will Be More Crucial for LatAm Than Most of the World
LatAm countries are all opening their economies despite ever faster contagion spreads and no decline in daily deaths anywhere other than Chile. The decline in testing of late in Argentina and Mexico (and perhaps in Brazil) may suggest that, amid people rejecting restrictions and dwindling fiscal and monetary resources to support the economy, governments have lost hope that they can control the virus. This would make the availability of a vaccine more crucial to LatAm than most of the world, as most countries have been more effective in fighting the virus.
Although the health situation is arguably worsening in most of the region, we believe that, considering how feeble their economies are and people’s need to make a living in absence of adequate social safety nets, governments will not re-impose stringent social-distancing measures. However, there is still a persistent risk of tighter social-distancing measures. We also note that, in our baseline scenario, which does not envisage a tightening of restrictions, there will be a portion of the population that remains hesitant in engaging in many economic activities until a vaccine is available, which we assume will happen by mid-2021.