The coronavirus pandemic continues to dominate headlines and in recent weeks has fanned fears of a global recession. With cases now rising across Latin America, and its economic impact on the region. Many regional central banks face complex and potentially unfavorable trade-offs when deciding how to properly calibrate their monetary policy responses

1. © FocusEconomics 2020
ISSN 2013-4975
Contributors
ARNE POHLMAN
Chief Economist
THOMAS FENGE
Head of Data Solutions
RICARD TORNÉ
Head of Data Analysis
Coronavirus Survey •
LATINFOCUS
CONSENSUSFORECAST
March 2020
PUBLICATION DATE 17 March 2020
FORECASTS COLLECTED 10 March - 15 March 2020
INFORMATION AVAILABLE Up to and including 15 March 2020
NEXT EDITION 21 April 2020
ANGELA BOUZANIS
Lead Economist
WILLIAM O’CONNELL
Editor
JOSÉ DANIEL MARÍN
Data Scientist
NICOLAS J. AGUILAR
Economist
HANNA ANDERSSON
Economist
MASSIMO BASSETTI
Economist
STEVEN BURKE
Economist
JAVIER COLATO
Economist
OLGA COSCODAN
Economist
EDWARD GARDNER
Economist
LINDSEY ICE
Economist
JAN LAMMERSEN
Economist
OLIVER REYNOLDS
Economist
ALMANAS STANAPEDIS
Economist
STEPHEN VOGADO
Economist
JOAN ARGILAGÓS
Data Analyst
FREDERICO T. ABREU
Junior Data Analyst
LAURA AZLOR
Junior Data Analyst
DAVID CATALÁN
Junior Data Analyst
MOHAMMED ESSABAOUNI
Junior Data Analyst
STÉPHANIE HOBEICHE
Junior Data Analyst
MAR LOBATO
Junior Data Analyst
YULIANNA VALENCIA
Junior Data Analyst
SARA VALVERDE
Junior Data Analyst
BENCE VÁRADI
Junior Data Scientist

2. FOCUSECONOMICS Coronavirus Survey
FocusEconomics Consensus Forecast | 2
March 2020
Coronavirus Survey
How will coronavirus impact the region?
The coronavirus pandemic continues to dominate headlines and in recent weeks has fanned fears of a global recession. With
cases now rising across Latin America, we polled our panelists on the likely economic impact on the region.
Regarding governments’ likely responses to the coronavirus,
several panelists highlighted fiscal and monetary policy easing:
“Some fiscal stimulus programs would emerge from countries
like Brazil, Mexico, Colombia, and even in Argentina. A possible
mix of polices postponing the payment of some taxes in the
economy with government-private sector initiatives like sick
leaves including partial pay could be seen in some countries in
the region throughout this year.”
Milton Guzman, senior economist at Andes Investments
“There will be additional monetary easing (rate cuts), especially
in Brazil and Mexico.”
Anjali Giron, head of investment strategy at Rimac Seguros
However, other panelists cautioned that fiscal room for maneuver
would be limited due to weak fiscal positions:
“I do not see economic stimulus responses because many of
the Latin American countries have a high fiscal deficit and
indebtedness [...]. In addition, the uncertainty in the financial
markets, causing falls in the stock markets and depreciation
of the currencies against the dollar, will cause the economic
authorities to monitor the situation before making decisions.”
Gabriela Mordecki, associate professor at the Instituto de
Economía, FCEA, Universidad de la República, Uruguay
“Latam is entering a very negative cycle and governments don’t
have money to fund stimulus.”
Gustavo Rojas-Matute, chief economist at Polinomics
Goldman Sachs expressed doubts over space for monetary
easing, commenting: “We expect many regional central banks to
facecomplexandpotentiallyunfavorabletrade-offswhendeciding
how to properly calibrate their monetary policy responses. [...]
Rising risk-aversion and risk-premia could generate currency
depreciation pressures alongside investors’ demand for higher
carry. This could limit the policy room for easing.”
However, they went on to say that “given the nature and the
severity of the shock to real activity, and the fact that absent
rate cuts, relative monetary conditions would tighten against
the FOMC, most of the G10, and many other large EMs, we are
of the view that the regional central banks will likely also lean
towards additional easing.”
Panelists see the coronavirus having a notable impact on regional
growth this year due to lower external demand, commodity prices
and tourist arrivals. Moreover, the region’s currencies have
tumbled in recent weeks amid sustained capital outflows; if this
tendency is maintained it could hit confidence and investment,
and cause a spike in inflation. However, the impact should be less
significant than in other world regions such as Asia or Europe,
due to Latin America’s lower degree of integration into global
value chains making it less vulnerable to supply disruptions.
50.0%
28.6%
21.4%
0%
20%
40%
60%
0.2–0.3 pp 0.4–0.5 pp > 0.5 pp
What will be the percentage-point reduction in Latin America’s
2020 GDP growth due to the coronavirus?
Note: Data corresponds to a poll of 14 FocusEconomics panelists, total responses in %.
Responses collected: 5 March–12 March.
Source: FocusEconomics.
Risks are clearly skewed to the downside. Although China
appears to have the virus under control, the external panorama
continues to darken as other countries battle with rising
caseloads. Moreover, domestic developments are concerning,
with the number of infections in Latin America continuing to climb
in recent days. If this tendency continues—as appears likely—
more governments could implement restrictive measures similar
to those seen in other parts of the world, which would severely
hamper domestic activity. Furthermore, weak public health
systems in many Latin American countries—Venezuela chief
among them—could facilitate the spread of the virus and lead to
higher death rates.
The large fall in commodity prices will also hit fiscal and external
accounts due to the fact that—with the exception of Mexico—the
region’s economies are large commodity exporters.

3. FOCUSECONOMICS Coronavirus Survey
FocusEconomics Consensus Forecast | 3
March 2020
Which countries will be most affected?
Country Minimum Maximum Consensus
Brazil 0.2 1.0 0.42
Chile 0.2 1.0 0.39
Argentina 0.1 1.0 0.38
Venezuela 0.0 1.0 0.36
Mexico 0.1 1.0 0.32
Colombia 0.1 0.8 0.30
Peru 0.1 1.0 0.29
Ecuador 0.0 0.6 0.26
Uruguay 0.0 0.8 0.24
Bolivia 0.0 0.5 0.23
Paraguay 0.0 0.5 0.21
Note: Data corresponds to minimum, maximum and Consensus forecasts of polls of 11–14
FocusEconomics panelists. Responses collected: 5 March–12 March.
Source: FocusEconomics.
Panelists expect Brazil, Chile and Argentina to be the most
affected countries, likely due to their large reliance on commodity
exports—global demand for which has been hit by the
coronavirus. Moreover, Brazil and Chile are highly exposed to
China, while financial stability in Argentina could be at risk if the
pandemic leads to a sustained flight to safety among investors.
At the other end of the scale, panelists judged that Bolivia,
Paraguay and Uruguay would be the countries least affected by
the virus. In the cases of Bolivia and Paraguay, this is likely due
to a relatively low exposure to China.
However, our panelists have likely mainly focused on countries’
external economic exposure, given the still relatively low number
of coronavirus cases in the region itself.
As such, the order of the countries listed could change rapidly
if coronavirus continues to spread in Latin America and affects
domestic as well as external demand. In this instance, factors such
as which countries suffer the largest outbreaks, the scope and
duration of government containment measures, the robustness
of health systems, the impact on local financial markets and the
effectiveness of fiscal and monetary policy stimulus will all be key
in determining the eventual economic impact in each country.
0.0 0.1 0.2 0.3 0.4 0.5
Paraguay
Bolivia
Uruguay
Ecuador
Peru
Colombia
Mexico
Venezuela
Argentina
Chile
Brazil
Oliver Reynolds
Economist
Stéphanie Hobeiche
Junior Data Analyst
William O’Connell
Editor
Percentage-point reduction in 2020 real GDP growth by country
How long will the economic impact last?
Yes
51%
No
49%
Will coronavirus negatively impact the global economy beyond
2020?
Note: Data corresponds to a poll of 43 FocusEconomics panelists. Responses collected: 16
March to 10:30 am GMT+1 on 17 March.
Source: FocusEconomics.
In a mid-March poll of our global panelists, roughly half now see
the global economic impact of the coronavirus lasting beyond
2020, up from a mere 5% in our first global coronavirus survey
in mid-February. This reflects the spread of the virus around
the world and difficulties with containment. That said, the most
significant impact is still likely to be felt over the next few months,
as many countries adopt restrictive measures in order to contain
the virus and global demand consequently suffers.

4. FOCUSECONOMICS
LatinFocus Consensus Forecast | 4
March 2020
Notes and Statements
PUBLICATION NOTE
Consensus forecasts are mean averages of projections of
economic forecasters surveyed by FocusEconomics for our
monthly publication. Quarterly averages may not correspond to
the annual figures due to different forecast panels.
The GDP-weighted averages for the regional aggregates refer to
economies surveyed by FocusEconomics on a monthly basis, and
include the following countries:
Latin America (23 countries): Argentina, Belize, Bolivia, Brazil,
Chile, Colombia, Costa Rica, Dominican Republic, Ecuador,
El Salvador, Guatemala, Haiti, Honduras, Jamaica, Mexico,
Nicaragua, Panama, Puerto Rico, Paraguay, Peru, Trinidad and
Tobago and Uruguay
Andean Community (4 countries): Bolivia, Colombia, Ecuador
and Peru.
Central America and Caribbean (12 countries): Belize, Costa
Rica, Dominican Republic, El Salvador, Guatemala, Haiti,
Honduras, Nicaragua, Panama, Puerto Rico and Trinidad and
Tobago.
Mercosur (5 countries): Argentina, Brazil, Paraguay and
Uruguay.
Venezuela is included in the LatinFocus report but not in regional
or world aggregates.
Weights are based on market exchange rates and reflect the
latest forecasts on GDP growth, inflation and exchange rates.
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