Latin America and the Caribbean: Impact of COVID-19

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Updated October 7, 2020
Latin America and the Caribbean: Impact of COVID-19
The Coronavirus Disease 2019 (COVID-19) pandemic is
in the price of oil that began in late February 2020.
having widespread economic, social, and political effects
Caribbean nations that depend on tourism face deep
on Latin America and the Caribbean, a region with strong
economic recessions, with a projected gross domestic
congressional interest because of deep U.S. linkages .
product decline of 10.3% in 2020, according to the IMF.
As of October 6, 2020, the region had almost 9.7 million
The decline in economic growth in 2020 is expected to
confirmed cases (27% of cases worldwide) and over
exacerbate income inequality and poverty throughout the
357,000 deaths (34% of deaths worldwide). Brazil, Mexico,
region. Latin America was already the most unequal region
Peru, Colombia, and Argentina have the highest numbers of
in the world in terms of income inequality, according to the
deaths in the region, and Brazil has the highest death toll
U.N. Economic Commission for Latin America and the
worldwide after the United States. The rankings change in
Caribbean (ECLAC). ECLAC projects that in 2020,
terms of per capita deaths—Peru has the highest recorded
inequality will rise in all countries, with the worst results in
deaths per capita in the region, followed by Bolivia, Brazil,
the region’s largest economies—Brazil, Mexico, and
Chile, and Ecuador (see Table 1). Several countries have
Argentina. According to a July 2020 U.N. report, poverty is
recently reported a gradual decline in cases and deaths from
expected to increase from 30.3% of the region’s population
peaks in August 2020. Nevertheless, a University of
in 2019 to 37.2% in 2020, an increase of 45 million people
Washington COVID-19 projection model forecasts that
(to 230 million people total).
deaths in Latin America and the Caribbean could reach
more than 500,000 by January 1, 2021.
Table 1. COVID-19 Deaths and Mortality Rates in
Latin America and the Caribbean (LAC)
Experts and observers have expressed concern that some
(countries with more than 1,000 deaths, as of Oct. 6, 2020)
countries, such as Mexico, Nicaragua, and Venezuela, are
significantly undercounting their death tolls. Many
observers have expressed special concern for Venezuela,
where the health care system was collapsing prior to the
(deaths per
pandemic. (See CRS In Focus IF11029, The Venezuela
Deaths per
Regional Humanitarian Crisis and COVID-19).
When the pandemic first began to surge in the region in
source not
May 2020, the Director of the Pan American Health
Organization (PAHO), Dr. Carissa Etienne, expressed
concern about the poor and other vulnerable groups at
greatest risk, including particular concern for those living in
cities, towns, and remote communities in the Amazon Basin
(including indigenous communities), people of African
descent, migrants in temporary settlements, and prisoners in
crowded jails. In July 2020, PAHO issued an alert urging
countries to intensify effort to prevent further spread of the
virus among indigenous communities in the Americas. In
September 2020, PAHO warned about increasing cases in
Central America and the Caribbean.
Economic Impact
Before the pandemic, the International Monetary Fund
(IMF) projected 1.6% economic growth for the region in
2020 but forecast a recession for several countries. On June
24, 2020, the IMF revised its regional forecast to a
contraction of 9.4%, with almost every country in
recession. Economic recovery may be a protracted process
Dom. Rep.
in countries that rely heavily on global trade and
Total LAC

investment, which the pandemic is significantly affecting.
Oil-producing countries in the region, especially Venezuela
United States

and Ecuador—and, to a lesser extent, Brazil, Colombia, and
Mexico—are being negatively affected by the historic drop

Latin America and the Caribbean: Impact of COVID-19
Source: Johns Hopkins University School of Medicine, Coronavirus
include an increase in authoritarian practices, weak
Resource Center, “Mortality Analyses,” October 6, 2020, updated
democratic institutions, politicized judicial systems,
daily at
corruption, and high levels of crime and violence.
The Bahamas had 24.29 deaths per 100,000, 11th highest in the
Economic factors include stagnant or declining growth;
region, and Costa Rica had 19.74 deaths per 100,000, 13th
high levels of inequality and poverty; and inadequate public
highest in the region.
services, social safety net programs, and advancement
opportunities. The COVID-19 pandemic could exacerbate
The World Bank had predicted in April 2020 that
these factors, contribute to further deterioration in political
remittances from abroad to Latin America and the
conditions, and stoke social unrest similar to that in 2019.
Caribbean would decline by over 19% in 2020. There are
Human rights groups and other observers have expressed
some indications, however, that remittances began to
concern about leaders taking advantage of the pandemic to
rebound in June and July 2020. The labor markets of many
advance their own agendas. In El Salvador, critics accuse
Latin American countries have high rates of informality,
President Bukele of exploiting the health crisis to pursue his
with many workers living without a safety net, making it
aggressive anti-gang policies. In Bolivia, the interim
difficult to design programs that reach and provide adequate
government twice postponed presidential elections,
assistance to these workers.
prompting widespread protests. In Venezuela, the
government and security forces have used a state of
Although a number of countries in the region have
emergency imposed to curb the spread of the virus as an
implemented stimulus programs to help protect their
excuse to crack down on dissent.
economies and vulnerable populations, many countries may
struggle to obtain the financing necessary to respond to the
U.S. Policy Considerations
severe economic downturn. In response, the international
Foreign Aid and Support for PAHO. In light of the
financial institutions are increasing lending to countries
pandemic and its economic and social effects, policymakers
throughout the region. Examples include
may consider the appropriate level of U.S. foreign

assistance for the region and for PAHO, which has played a
The Inter-American Development Bank is making
major role in supporting the response to COVID-19 in the
available up to $12 billion, including $3.2 billion in
Americas. The Administration’s FY2021 budget request—
additional funding for 2020 and the remainder in
released prior to the pandemic—included $1.4 billion in
reprogrammed existing health projects. It is providing
foreign assistance for the region, about an 18% decline
lending support in four priority areas: the immediate
from the estimated amount appropriated in FY2020. The
public health response, safety nets for vulnerable
request included almost $133 million in Global Health
populations, economic productivity and employment,
Programs assistance for the region, 37% less than the
and fiscal policies for the amelioration of economic
FY2020 estimate. In addition, the Administration requested
$16.3 million for PAHO, almost a 75% cut from estimated

appropriations in FY2019.
The World Bank, as of October 2, 2020, reported that it
is providing almost $4.5 billion to 20 Latin American
In March 2020, Congress passed two supplemental
and Caribbean countries. The assistance focuses on
appropriations measures—P.L. 116-123 and P.L. 116-
minimizing the loss of life, strengthening health systems
136—that provided nearly $1.8 billion in aid to respond to
and disease surveillance, mitigating the pandemic’s
COVID-19 globally. As of August 21, 2020, the
economic impact, and addressing supply-chain issues
Administration said it was providing $141.35 million in
and delivery. Over the next 15 months, countries in the
new and previously announced assistance to help countries
region also may benefit from a portion of the $160
in the region respond to the pandemic, including $103.3
billion in worldwide assistance the bank is providing.
million in humanitarian assistance, $27.6 million in health

assistance, and $10.45 million in economic aid. The House
The IMF, as of October 2, 2020, approved $63.6 billion
foreign aid appropriations bill, H.R. 7608, passed July 24,
in lending to 20 countries in the region contending with
2020, would fully fund the U.S. assessed contribution of
the pandemic’s economic impact, including Chile, $23.9
$65.2 million to PAHO in FY2021 and provide $9.1 billion
billion; Colombia, $16.9 billion; Peru, $11 billion; and
in emergency aid to respond to COVID-19 worldwide. (See
Ecuador, $7.1 billion.
CRS Report R46514, U.S. Foreign Assistance to Latin

America and the Caribbean: FY2021 Appropriations.)
The Development Bank of Latin America, as of July
2020, is providing $4.9 billion in financing to address
Sanctions. Some U.N. officials, human rights
the effects of the pandemic across the region.
organizations, and Members of Congress have called for
U.S. economic sanctions on Venezuela and Cuba to be
Political Impact
waived during the pandemic. The Treasury Department
Even before the pandemic, public satisfaction with the
released a fact sheet in April 2020 maintaining that U.S.
quality of democracy in several Latin America and
sanctions programs generally allow for legitimate
Caribbean countries was eroding. The 2018-2019
humanitarian-related trade and assistance. At the same time,
AmericasBarometer public opinion survey showed the
the Trump Administration has continued to increase
lowest level of satisfaction with democracy since the poll
economic sanctions on both countries.
began in 2004. Several broad political and economic factors
have driven the decline and help explain the eruption of
Mark P. Sullivan, Specialist in Latin American Affairs
social protests in the region in 2019. Political factors

Latin America and the Caribbean: Impact of COVID-19
June S. Beittel, Analyst in Latin American Affairs
Peter J. Meyer, Specialist in Latin American Affairs
Clare Ribando Seelke, Specialist in Latin American
Maureen Taft-Morales, Specialist in Latin American

Latin America and the Caribbean: Impact of COVID-19


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