The combination of laxer social distancing and slow vaccination has led to new waves of COVID-19 outbreaks across Latin America, even in Chile, where 41.6% of the population had already received at least one vaccine dose as of April 26. This situation has resulted in new lockdowns and curfews, which, in the context of weaker fiscal stimulus, will dent Latin America’s economic recovery.

  • In Brazil, the second COVID-19 wave will drive market volatility and delay the country’s economic bounce-back
  • Colombia’s outlook will be impacted by the upcoming tax reform amid a dire fiscal situation and a year before the presidential election
  • A third wave of COVID-19 in Chile will weigh on short-term economic activity as the government discusses further stimulus
  • Mexico’s economy will contract in Q1 due to the pandemic situation, but it is poised to improve in Q2 driven by exports and a better vaccine rollout
  • In Argentina, while soy revenues will enable the government to muddle through most of 2021, debt restructuring will be critical to bolstering the 2022 outlook
  • Peru’s June elections cast a shadow over the country’s outlook, as either candidate is likely to face governability challenges

Read our Latin America Market Monitor report for a snapshot of every Tier 1 and Tier 2 Latin American market’s economic recovery status this month.

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