Calm after the storm?

Omicron sweeps Latin America but economic challenges are becoming more concerning.

Whilst Covid has ravaged much of Latin America, the world’s worst-hit region by the pandemic, it was prophesised that a further and more virulent strain of the virus might induce an economic paralysis from which the region may never fully recover.  

Certainly, Latin American administrations have introduced more sensible and resilient measures to stem the tide this time round but long-term fiscal concerns remain. “Understandably, what governments across the region are seeking to do is to avoid a paralysis of economic activity”, emphasised a senior director at the Mexican Institute of Social Security. 

Mexico itself is struggling with a fourth wave of Covid. Although cases, and thus admissions, have risen, long-term hospitalisations remain stable or decreasing across much of the country. 

“Understandably, what governments across the region are seeking to do is to avoid a paralysis of economic activity.”

Senior director, Institute of Social Security, Mexico

Further south in Argentina, a university doctor and former adviser to the Government on the pandemic, explained “Argentina’s major challenge at the moment is that no one expected an explosion of cases like the one that has occurred. It caught the health system off guard. Many testing centres were deactivated which caused delays to government targets.” 

Fortunately, Buenos Aires began its Covid fightback early. The Government had the foresight to stress the importance of vaccination as soon as the realities of the pandemic became clear – there was little resistance, politically or culturally, to vaccination programmes. 

Despite its high death toll from the initial waves of Covid, Mexico has a fairly resilient and well-resourced healthcare system with plenty of hospital beds. The challenge should Omicron take a firmer hold is whether healthcare personnel – too many of whom are not fully vaccinated – will be infected at the same rate as the population at large making it extremely challenging to provide healthcare services.  

On the economic front, Mexico is highly reliant on revenue generated by its tourist industry which has been hit hard by rising cases. The senior director explained, “Currently, there is significant contagion in tourist areas due to the winter vacation period that could last throughout January.” 

Booster vaccines will do much to stem the tide of a potential Omicron avalanche and mitigate economic damage. Striking billboard posters and blunt televised adverts are designed to hammer home the message of anxious governments.  

Uptick however has not always reflected urgency. The senior director added, “The vaccination process has advanced at a good pace in Mexico, but not evenly. Only 50% of the population has some degree of protection, so in certain regions Omicron could have more severe effects.” 

“There is no room for [more drastic Omicron measures, people would not accept or abide by it.”

University doctor and adviser to the Argentinian government

Administrations across the region have seen GDP growth dip and unemployment rise exponentially. The pandemic has been particularly damaging given the dependence of regional economies on the export of commodities. A slowdown driven by weaker demand in foreign markets, affects all levels of the supply chain from the fisherman to factories.  

Could governments take more drastic action to stem the tide? The university doctor doubts it, “Regarding the possibility of the Government taking more severe measures to tackle Omicron, this seems unlikely. People would not accept or abide by it.” 

If Omicron surges further and afflicts a broader swathe of the population who work in primary industries, growth will suffer as staff stay at home, others leave to take care of loved ones and the number of infections at companies becomes so high, they are no longer to function. 

This, for the time being, looks look the doomsday scenario that can be avoided if vaccination programmes continue apace. The damage already wrought however could take a generation to reverse.  

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