Last Thursday, Brazil closed its borders with eight neighboring countries, joining other South American nations in a continent-wide quarantine as authorities struggle to control
the spread of the coronavirus.
The measure taken by Brazil, Latin America’s largest economy, applies to Argentina, Bolivia, Colombia, Paraguay, Peru, Suriname, Guyana and the French overseas department of Guiana. Brazil’s border with Venezuela was already closed, while the border with Uruguay remains open for now.
The Wall Street Journal reports that Brazil has a total of about 10,000 miles of land borders with its neighbors, and all but about 650 miles of them, with Uruguay, are now closed.
In recent days, countries across Latin America have made swift moves to seal national borders as coronavirus cases rise, leaving thousands of travelers stranded. Concurrently, the downturn in China has drawn fears of a protracted slowdown for the region’s predominately commodities-driven economies and a tougher rebound.
“South America was caught flat-footed, and now they’re trying to catch up. 2020 was already going to be a year of sluggish growth. Now, the virus is clearly going to add downward pressure,” said Eric Farnsworth, who tracks the region for the Americas Society/Council of the Americas, a Washington-based policy group.
Some of the region’s biggest businesses are being forced to ramp down operations. Chilean-based
Latam Airlines Group announced it was canceling 90% of its international flights, while asking workers to take a 50% pay cut.
“The combination of declining external demand for goods and services, worsening terms of trade, significant tightening of domestic financial conditions, and the economic impact of the rapidly escalating measures to deal with Covid-19 outbreaks within national borders” prompted the revisions, said Goldman Sachs economist Alberto Ramos.
Corporación Nacional del Cobre de Chile, or
Codelco, the world’s biggest copper producer, said it was cutting back operations in Chile to protect the health of workers as President Sebastian Piñera on Thursday announced a $11.7 billion plan to support the economy.
“We all understand the anguish and uncertainty from this crisis and the threat from the coronavirus pandemic. We need unity,” said President Piñera.
In Peru, the government has implemented a nighttime curfew, fish exporters halted shipments to China, and miners like gold producer Yanacocha are also reducing activities.
Oxford Economics, a London-based consulting firm, said many countries in the region will “struggle to implement countercyclical fiscal policies to support the economy during the downturn due to their debt.” Additionally, sharp depreciation of most of the region’s currencies against the dollar is likely far from over.
“Prolonged currency weakness is a key transmission channel to the real economy in this scenario,” the firm said.
Brazil, which has reported 63 deaths from the virus (as of Thursday, March 26), closed its land borders with its neighboring countries for 15 days, with the possibility of an extension, according to the official government newspaper. Brazilian citizens and residents are still allowed to enter the country, as are foreign citizens working for international organizations or otherwise authorized by the Brazilian government. Trucks carrying commercial goods are also permitted to cross the border.
São Paulo and Rio de Janeiro recommended the closure of shopping malls, gyms and other businesses where people gather. As layoffs ripple through the region, Brazilian workers are feeling the impact.
“We’re worried there won’t be enough demand, we’re worried about our jobs, about paying the rent,” said Jose Roberto Paoli, who works in an optician shop in the center of São Paulo. Business is down about 95% from two weeks ago, he added.
Last Thursday, Colombia also said travelers, including Colombian citizens, would be barred from entering the country beginning next week. The move is the latest drastic measure taken since President Ivan Duque declared a state of emergency earlier last week as Colombia struggles to contain the spread of Covid-19 and cope with the turmoil of global financial markets, where the value of the national currency, the peso, has dropped nearly a third of its value against the dollar.
The Duque administration has ordered a mandatory six-week lockdown for elder citizens as the number of confirmed coronavirus cases amounts to
491, as of Thursday, March 26.
“We’re going to have to make even tougher decisions going forward. It’s painful, but it’s necessary,” President Duque said.