Coronavirus: Latin American Countries Expected To Take Huge Economic Hit That Could Lead To Recession

While COVID-19 spells bad news to the global economy, experts ascertain that Latin American economies are likely to experience a massive hit owing to slow trade, a surge in commodity prices, and wobbly financial markets. Countries like Chile, Mexico, and Argentina will witness their economies shrink this year, and on the other hand, Brazil is likely to expect no growth as well.

“Most hard activity figures for Latin American countries are yet to capture the ongoing economic and market disruption caused by the coronavirus outbreak," said Quinn Markwith, an economist covering Latin America at Capital Economics as per a recent media report.

“Financial conditions have generally tightened more in Latin America (particularly Mexico) than in the rest of the emerging world in recent weeks. This presents another reason to think that activity will weaken dramatically in the coming months, alongside lower commodity prices and virus containment measures,” he added.

As per a report on The New York Times, the impact of the virus is likely to push the third world countries to a recession. The report categorically specifies that Latin America, Colombia, Brazil, and Mexico will take the largest GDP hits all year.

So, what makes the Coronavirus trigger recession? Well, the answer is clear: The virus disrupts economic activity to a great deal, compounded by stern bans on travel which in a way leads to the tourism industry taking a major beating. Add to it, the need for self-quarantining in a bid to contain the virus that’s proliferating in some countries leads to a sharp slowdown this year.

What needs to be noted is that Colombia, Ecuador, and Peru predicted the financial doom early on, a little after the COVID-19 outbreak began to spread across nations. As of Latin American economies, there’s a strong likelihood for it being shrunk to 1.5 percent, which is also pegged as the worst outcome since the disastrous global financial crisis in 2009.

At present, the number of coronavirus cases tested positive globally stands at 187,000. With over 7,400 deaths, it is reported that the highly contagious virus has claimed the lives of several outside mainland China and within its boundaries.