(Bloomberg) – Latin America and the Caribbean, the region where the coronavirus has caused the worst economic devastation and more than a quarter of deaths globally, is now being hit by a slow vaccination campaign.
Political struggles and production bottlenecks are hampering Brazil’s vaccination initiatives; Mexico is struggling to get more doses as its death toll surpasses India’s; and Colombia began administering vaccines just last week.
There is a risk that such slowness, coupled with a recent spike in infections, will hamper an already slow economic recovery.
“If vaccination and public health policy fail to reverse the trend we have seen in recent months, clearly this recovery is at risk,” Alejandro Werner, director of the Western Hemisphere Department of the International Monetary Fund, said this month.
Latin America’s economic recovery was already faltering after a new round of lockdown measures was imposed in response to the surge in cases that began around the Christmas holidays. Since January, JPMorgan Chase & Co. lowered its first-quarter growth forecasts for Argentina, Brazil, Chile, Colombia and Mexico, citing concerns about the increase in the number of cases and the new restrictions.
The region contracted by more than 7% last year, according to the IMF, the largest decline in the world. The Fund does not believe production will return to its pre-pandemic levels until 2023, and this year is off to a rocky start.
In December, Brazilian retail sales suffered the biggest drop on record for the month of December, pointing to a sharp slowdown in Latin America’s largest economy. Meanwhile, Mexico’s recovery weakened as growth slowed from 12.1% to 3.1% in the last two quarters of 2020.
Chile stands out positively
Activity is expected to pick up later this year, but a strong recovery is dependent on greater availability of vaccines in the coming months. An efficient deployment of vaccines is of great importance, and investors are already rewarding the only successful case from Latin America so far: Chile, which is on track to vaccinate 75% of its population in just six months, according to Bloomberg’s Vaccine Tracker.
This month, both Moody’s Investors Service and Spain’s Banco Santander revised up their growth forecasts for Chile, distancing it from its neighbors. Its economy will return to pre-pandemic levels three to six months earlier than most other countries in the region, according to Nikhil Sanghani, an economist at Capital Economics in London.
The Chilean peso has led the advances among its regional peers, for an advance of more than 3% so far this month.
Other countries in the region don’t even come close. At the current rate, it would take Brazil two and a half years to reach the vaccination level of 75%, which is the threshold that experts consider necessary for a return to normality. Mexico would take 3.6 years and Argentina, more than a decade. In contrast, the United States is projected to achieve herd immunity by the end of the year.
This outlook could improve in the coming weeks as some of the initial problems with the launch of the vaccine begin to subside, Sanghani said.
Delays in delivery of treatments have forced countries that relied heavily on private vaccines, such as Mexico and Colombia, to sign last-minute contracts with rivals. Argentina is trying to produce more locally.
After months of delaying ordering, the Administration of Brazilian President Jair Bolsonaro is running out of doses to maintain its vaccination campaign, prompting nine state capitals, including Rio de Janeiro, to suspend efforts.
But not all delays in vaccination efforts are self-inflicted.
From the beginning, poorer countries have been displaced by richer nations that quickly struck deals with drug companies.
Much of the Caribbean and Central America are still weeks away from starting their campaigns. Jamaica’s Prime Minister Andrew Holness last month accused rich countries of “hoarding” vaccines.
Economists watching mobility trends are bracing for another hit to activity caused by further lockdowns and closures in trade. Leaving Chile aside, they remain skeptical about easing restrictions for the rest of the region given its slow start and the distance from the main vaccine distributors.
“The richest countries have already started to buy as much as they could, leaving only breadcrumbs for the rest,” said Joan Domene, an economist at Mexico City-based Oxford Economics Ltd.
Original Note: Vaccine Delays Threaten Economies Hardest Hit by Pandemic
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