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A Looming Crisis Next Door: The Impact of COVID-19 in Latin America Wikipedia, Standard N95 filtering facepiece respirator

A Looming Crisis Next Door: The Impact of COVID-19 in Latin America

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As COVID-19 tests the strength of public health systems worldwide, it also presents particular challenges for trade, financial markets, and immigration between the U.S. and Latin America. These fields are key to U.S. national security in both the short term and long run. U.S. policymakers should understand the challenges that COVID-19 poses to partner nations in Latin America, identify the effects of these challenges on the U.S. economy and immigration system, and work with Latin American countries to shore up public health systems and social safety nets in the region for the benefit of all.

 

Mexico and Brazil

Mexico and Brazil, two significant economic and immigration partners of the U.S., have Latin America’s top two highest COVID-19 caseloads and fatalities. Mexico is a key partner for US immigration policy, while Brazil is the region’s largest economy and an essential trading partner. As of mid-June, Mexico has attempted a phased reopening to support the economy, but limited testing has obscured the depth of the problem and the needed scope of economic and medical relief efforts. In Brazil, political infighting has weakened the response of the public healthcare system, as cases and fatalities have soared to the world’s second-highest statistics behind the U.S..

The near-collapse of these allies’ healthcare systems may well exacerbate their economic and immigration challenges. As workers in informal sectors such as street vending and blue-collar roles disproportionately contract the virus, Brazil and Mexico’s economies will likely stagnate. Due to the close trading ties between these countries and the U.S., economic turmoil in one or both forebodes economic challenges in the U.S.—a national security cause for concern. Relatedly, as healthcare systems become unable to support the population’s needs, citizens—particularly in Mexico and neighboring Central American countries—may consider immigrating northward. In sum, a quick glance at these countries predicts the ways in which COVID-19 interacts with regional economics and immigration, and how these connect to the U.S.

 

Short-Term Effects of COVID-19 on Latin America

Recent statistics confirm yet nuance the patterns predicted by Brazil and Mexico. Earlier this year, Latin American governments issued approximately $13 billion in new cross-border bonds to secure coronavirus funding from international markets. The region, long an exporter of commodity goods, suffered a compound setback as commodity prices dropped in mid-March. The UN Economic Commission for Latin America and the Caribbean bluntly assessed that “the COVID-19 pandemic will cause the most severe economic crisis that Latin America and the Caribbean will have experienced in its entire history […] [It will] destroy jobs, increase unemployment, and make working conditions more precarious”. Given strong U.S.-Latin American trading ties, U.S. imports from the region will likely decrease or shift in nature, which may alter American farmers’ and industries’ calculations. U.S. exports to the region may also slow as Latin American countries seek to reduce spending.

However, COVID-19 has fueled a slowdown in Latin American migration to the U.S.. Some migrants have calculated that they will no longer be able to earn a living abroad, while others reacted to the Trump administration’s stringent COVID-induced border restrictions. From preliminary data, however, it is unclear if a much higher extent of job loss and economic uncertainty in Latin American countries might motivate immigrants to risk health and safety to again travel to the U.S.

 

Projected Long-Term Effects of COVID-19 on Latin America

Long-term economic and migratory effects of COVID-19 on Latin America will likely be defined by two factors: (1) lost time for education and (2) commodity price fluctuations in the coming years. Economists prioritize human capital in understanding countries’ development, and human capital is accumulated through education. Currently, an estimated 95% of children in Latin America are learning from home because of cancelled school. Experts note that independent learning, coupled with incomplete access to the Internet, will exacerbate existing social and economic inequalities for these students. Thus, one possible outcome is that an intermittently-educated workforce translates into future economic stagnation for Latin America.

The second driver of long-term predictions is commodity prices, subject to external market volatility in Asia—particularly China—and the U.S.. In post-COVID years where commodity prices are lower than average, Latin America may experience further challenges to economic recovery. These economic difficulties may in turn spur renewed migration to the U.S. for the promise of job security, especially if the U.S. has a faster or more complete economic recovery than its Latin American neighbors. All in all, the U.S. and Latin America are inextricably linked through U.S. national security priorities of economics and immigration. When a coronavirus-induced shock to the region occurs, it has unavoidable short- and long-term implications for all countries in it.

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