Coronavirus seen hurting Latin America’s economies

The coronavirus outbreak is expected to heavily impact Latin America’s economies, despite there not yet having been a significant number of cases confirmed in the region, as it affects global supply chains and trade, according to Zhen Pan, an associate attorney at Miami-based law firm Diaz, Reus & Targ.

In an article addressing the anticipated effects of the coronavirus on Latin America published in The Dialogue, Zhen (pictured) said, “the ripple effects of the outbreak will negatively affect global business in general, and Latin America’s economies in particular”. 

“Since the early 2000s, China’s economy has doubled its size. It has become the second-largest trading partner in Latin America, and the top importer from Brazil, Peru, Uruguay and Chile for products such as oil, copper, wine, seafood and fruits. As the virus continues to spread across China and business interruptions and closures remain in place, exports from these countries will plummet, and Latin America’s economies will be hurt given their reliance on trade and investment with China to drive growth,” he said.

“The specific impact on each Latin American country depends on how important trade is to that country’s economy. The more the economy is dependent on exports to China, the greater the country would be exposed to weaker Chinese demand.

In Chile and Peru, their exports to China account for more than 33 per cent and 25 per cent, respectively, of their total exports. As trade accounts for almost 50 per cent of the countries’ GDP, it appears that Chile and Peru would be most exposed to a weaker import demand from China. While exports to China account for 25 per cent of Brazil’s all exports, the impact would be somewhat smaller because Brazil has a more diversified export basket,” he said.