Activity in Latin America during the Covid-19 shock

The pandemic outbreak and the subsequent domestic policy response deeply affected LAC economies. Activity dropped between -11% (Peru) and 0.4% (Paraguay) in 2020, though intra-year dynamics were slightly heterogeneous. For some (notably, Ecuador, Peru and Argentina), the downfall was "fast and furious", concentrating in 2021's early months. For others, the recession was milder and more distributed along the year.

The deeper the fall, the faster the recovery. Unsurprisingly, the speed of economic recovery was also different between countries. Those which suffered most and earlier recovered stronger and faster than others.

Activity in Latin America was trying to recover when the "second wave" hit our shores. Regardless of specific dynamics, most LAC economies where close to pre-pandemic levels (some above -Ecuador- and others below -Argentina-) by end-Q1. With the renewed pandemic outbreak, early data shows that activity has suffered another setback. The extent of the economic damage will depend, of course, on the severity of the contagion and the associated policy response. After last year's experience, most governments seem reluctant to implement harsh nation-wide lockdowns.