LatAm Daily Briefing: Argentina Bans Social Gatherings; Brazil Sees Improved Economic Outlook; Ecuador Wins Creditor Support

3 August: Find out what's been happening in Latin America with our latest news update.

3 August: Find out what's been happening in Latin America with our latest news update.

Argentina’s government has banned all social gatherings for the next 15 days, amid a record surge in Covid-19 cases and fatalities. The move was announced on Sunday by Health Access Minister Carla Vizzotti after the country surpassed 200,000 cases of Covid-19, while the death toll has surpassed 3,500. Vizzotti said the decision to curtail gatherings was a result of the surge in confirmed cases over the last month and amid evidence that the spread of the virus was increasing as a result of get-togethers. The capital Buenos Aires had extended restrictions on citizens’ movements for a futher two weeks on July 31st.

Brazil’s economic forecasts have improved, according to a survey by the central bank, with an average prediction of a GDP contraction of 5.7%, an improvement on the 6.5% contraction predicted a month ago. Economy Ministry officials are confident the contraction will be closer to the government’s 4.7% contraction, according to Reuters. The central bank’s latest weekly survey of around 100 economists also showed 2020 current account deficit projections narrowing for a sixth consecutive week, to $6.2 billion from $8.3 billion. The average forecast in May was for a deficit of almost $40 billion.

Chile’s government has announced it will invest $34 billion between 2020-22, which will include an additional $4.5 billion not previously planned, to develop public works across the country, and which are expected to create 250,000 new jobs. The works will include the urban and housing sectors, highways and roads, port and airports, drinking water, and hospital, public transport and sporting and cultural investments, according to press reports.  The investment will also include subsidies to support and small and medium-sized business to help them ameliorate the adverse economic effects of the Covid-19 pandemic.

Ecuador has won the support of its bondholders for its proposal for the restructuring of its $17.4 billion foreign debt. President Lenín Moreno’s government has announced it will exchange 10 existing notes maturing between 2022 and 2030 for three new bonds due in 2030, 2035 and 2040. Under the new terms, interest payments will resume at the beginning of next year, while the earliest principal comes due in January 2026. “With this, we free up resources for social protection and economic recovery,” Moreno wrote in a tweet. Last month Ecuador announced that it had secured the support of 53 percent of creditors and formally presented its restructure plan on July 20.

Mexico’s GDP contraction for 2020 could be up to 10%, according to analysts consulted by the Bank of Mexico. The central bank consulted 36 analysts, whose predictions range from an 8.8% to a 10% contraction as a result of the economic shutdown imposed to contain the Covid-19 pandemic, El Universal newspaper reported. Analysts predicted inflation for this year would be to the tune of 3.6%. Mexico is now in third place behind Brazil and the US in terms of Covid-19 death toll, with the figure rising to 47,746 on Monday.

The number of people living in poverty in Peru is likely to increase by between 8-10% as a result of the economic shutdown imposed to contain the Covid-19 pandemic, according to the president of the Council of Ministers, Pedro Cateriano. “The plague has had a significant economic impact,” he said, adding that while the quarantine measures have saved hundreds of lives, it has had negative effects on employment, incomes and consumption. He said the crisis could result in 868,000 households being unable to afford basic goods, and 64% of which are in urban areas, according to El Comercio newspaper.


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