As Debt, Inflation and Hunger Rises, Latin America’s Fate Lies Once Again in Wall Street’s Hands

We’ve seen this movie before and it rarely ends well.

I’m writing this post from the veranda of my father-in-law’s home in Tepoztlan, a beautiful, mystical town just 60 kilometers south of Mexico City. Ringed by serrated mountain ridges, upon one of which overhangs the Aztec Tepozteco pyramid, Tepoztlan is famed for being the reputed birthplace of Quetzalcoatl, the Aztec feathered serpent god. The temperature right now is an agreeable 24 degrees Celsius (75 degrees Fahrenheit) — perfect Christmas weather!

Mexico is the Mos Eisley of the pandemic era: you don’t even need a negative PCR to get through border control. This has helped boost the country’s tourism sector, which was the third largest globally last year, but it hasn’t helped to keep Covid at bay.

My wife and I landed in Mexico City just over a week ago on a direct flight from Barcelona. It was our first flight in two years. Every seat on board was occupied. We masked up heavily and thankfully appear to have avoided recatching Covid-19, after coming down with the virus in August. That means we can now focus on catching up, mostly outdoors, with relatives and friends we haven’t seen for two and a half years.

Mexico City is in celebratory mood. After months of Covid-19 restrictions, the city was given a full bill of health by the public health authorities just in time for Christmas festivities. And the city’s residents are making the most of it. Just about every restaurant we’ve been past at lunch or dinner time has been packed to the rafters. Based on conversations we have had with friends and family, most people seem quite content (or in some cases desperate) to resume some semblance of normal life, often under the false assumption that the vaccines provide them with strong protection against catching the virus.

Mexico, like pretty much much all of Latin America (and let’s face it, most of the world) has been through the grinder. Many people — probably significantly more than the official statistics suggest — have been taken by Covid-19.

Arturo, the 60-year old gardener who for many years tended my father-in-law’s smallish garden, succumbed in just over a week. As far as we know, he was in sound health and looked a good ten years younger than his actual age. That was in August. A month later Berta, who cleans my father-in-law’s house a few times a week, caught the virus and ended up in critical condition in a Cuernavaca hospital. It was a close thing but she made it through in the end.

Many others in Tepoztlan didn’t. A couple of days ago, Berta told me she had lost many friends and family members to Covid in the last wave, during the height of summer. Some of them were in their thirties and forties.

Covid Central

Latin America and the Caribbean has the highest official death toll from Covid-19 of any region on the planet. It accounts for just under 10% of the global population but around 20% of global Covid-19 cases and almost a third of deaths.

It’s not hard to see why. Local economies, like sharks, simply cannot afford to stop moving. In most cases, restrictions are not as stringent as they are in Europe. As I wrote on Wolf Street in May 2020, as the first Covid wave began to hammer the region, “locking down entire cities or countries and paying millions of non-essential workers not to work for weeks on end while healthcare workers battle to contain the virus is a luxury only afforded to countries with first-world economies, huge public debt capacities, relatively stable currencies and big central banks.”

For many workers in Latin America and the Caribbean, not working for just a few days spells ruin, quickly followed by hunger. The number of people suffering from hunger in the region rose by 13.8 million in 2020, to 60 million, according to the United Nation’s Food and Agriculture Organization. That is the equivalent of roughly 10% of the region’s population. The hardest hit country, unsurprisingly, is Haiti, where a mind-blowing 46% of the population suffers from undernourishment. Hyperinflationary Venezuela has the highest levels of hunger in South America, with 27% of the population affected.

In total, 267 million people — the equivalent of 40% of the region’s entire — experienced moderate or severe food insecurity in 2020, 60 million more than in 2019.* It was the highest rise of any world region. Although the pandemic has sharply exacerbated the situation, hunger has been rising in Latin America and the Caribbean since 2014.

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