Protests, Economics and Coronavirus
The wave of protests, the pandemic and reduced economic activity will all play off each other in very negative ways for Latin American governments.
I’ve spent a good part of this week researching and writing about three big stories in the region:
Coronavirus is impacting the global economy, with China’s downturn in demand and disruption of supply chains hitting Latin America’s commodity exporters particularly hard.
The virus is spreading globally, almost certain to spread in Latin America at some point later this year, creating a public health challenge. Both Brazil and Mexico confirmed their first cases this week.
March 2020 is going to be a hot month for protests in Latin America and the Caribbean.
For paying subscribers today, as the final report of this month and building on my comments on Monday, here are a few ways those three stories will interact with each other in the months to come.
A Latin American recession
One big impact over the course of 2020 will be the overlap and negative spiral of economic disruptions caused by protests and disease. It seems likely at this point the economic disruption due to the drop in tourism, manufacturing and global commodity demand may impact Latin America more greatly than the direct health impacts of Covid-19.
Economic growth rates across Latin America and the Caribbean are already expected to be quite low. Coronavirus, and the resulting harm caused to China’s economy and global supply chains, are likely to hit Latin American growth rates. There is an increased likelihood that commodity exporting countries in South America that were in or near recession will enter or stay in recession territory (Argentina, Brazil, Chile) while the few countries that overperformed last year will go closer to zero growth (Colombia, Peru).
While Mexico’s economy will not be hit as hard by the lower demand from China, the potential for a worsening US economy will definitely hit hard. Mexico was in a technical recession in 2019 and will likely have another few quarters of economic loss in 2020 if the US economy declines.
Expect nearly every country’s growth rate to be revised down in the coming months.
Recessions will increase public anger at governments
That worsening economic performance will increase the anger citizens have at their government’s inability to meet their basic demands. That anger will be expressed at the voting booth and in protests.
While there are few elections scheduled for 2020, for those countries going to the polls, lower economic growth means incumbent parties are likely to be punished by voters. In particular, this makes opposition victories more likely in the presidential elections in the Dominican Republic and municipal elections in Brazil.
Chile, which was already expected to overhaul its constitution over economic justice issues, is more likely to see a radical shift in its economic model if those reforms happen in a year of recession.
Restrictions on public gatherings will face off against protests
While public health officials are largely convinced that Covid-19 will spread globally, it is unlikely to be at pandemic levels in Latin America in March as protests increase in Latin America.
Still, some governments may attempt to block or repress protests by claiming that they cannot allow public gatherings given coronavirus fears. At least for the month of March, protesters will see through this as an illegitimate excuse. At the same time, legitimate fears about large public gatherings will grow as the virus makes its way into the hemisphere, meaning restrictions on protests in future months may become flashpoints for controversy.
As occurred in Italy this past week, soccer matches are another public gathering that may be restricted in some countries in Latin America. Soccer is very political in the region. Citizens, already angry at governments, will not be happy to have a major form of entertainment restricted. Chile’s protest movement has grown around soccer matches. The various fan clubs are known to be involved in political and protest organization in moments of tension.
Governments will struggle to fight misinformation and political criticisms on both protests and disease
Above: Mexico’s Secretary of Health delivers info about the first confirmed cases of Covid-19 at this morning’s press conference
Governments that faced a wave of social media misinformation during last year’s protest events must now deal with some of those same networks spreading misinformation about coronavirus. The misinformation or disinformation that spreads could impact public health. Governments will need to find ways to communicate truthful information and push back against misinformation without accidentally amplifying it. In some countries where government information is not trusted (often for good reason), governments must find a way to separate the important public health information communicated by experts from the propaganda efforts that citizens largely filter out as noise.
Within that communications environment, political opportunists and online trolls will almost certainly critique government responses that fall short of perfect (as every government will in some way). There is potential that government failures, either real or perceived, will become focal points for new online and real world protests.
Secondary impacts will benefit organized crime
Governments will be distracted and resource constrained by the combined economic, political and pandemic challenges. That means fewer resources and personnel dedicated to stopping criminal organizations. The economic downturn also drives people into gray and black market activity in a way that will benefit criminal organizations. Youth gangs, in particular, will be able to grow in an environment with high unemployment.
The gray and black market will aim to fill any shortages caused by pandemic response, creating another avenue for profit by criminal organizations and a potential area for conflict if two organizations fight over the same supplies or if governments decide to crack down on black market activity involving any health related products. If there are more serious containment efforts including quarantines of neighborhoods or cities that restrict transportation routes, this could create fights over food and fuel supplies.
While most protesters are peaceful, criminal organizations will find ways to benefit from increasing protests. Organized robberies disguised as spontaneous looting events occurred last year during protests in Chile and Colombia and are likely to occur again.
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