Economic Impact of COVID-19 in Latin America and the Caribbean (LAC)
- The region has accounted for 28% of all COVID-19 deaths in the world, despite having only 8.4% of the global population.
- Since the start of the pandemic, the number of people living in poverty remains 14 million higher compared to 2019.
- Since the start of the pandemic, the number of people living in extreme poverty in LAC has risen by 16 million.
- LAC was the region that experienced the most drastic drop in employment in 2020. Women, young people and people working in the informal sector have been the most impacted.
- Almost 60% of the children who missed an entire school year in the world were in LAC.
- 44 million people became food insecure, of which 21 million became severely food insecure.
COVID-19 Exacerbated by Inequality
- LAC continues to be the world’s most unequal region. In 2019, the richest 20% of the population held almost half of total income, while the poorest 20% held less than 5% of total income.
- The richest 1% in the region holds almost one quarter of total income.
- There is a link between higher levels of income inequality and the impact of the pandemic in terms of lives lost. The most unequal countries in the region (such as Peru, Mexico, Brazil, Chile, Colombia and Paraguay) had very high numbers of COVID-19 deaths per million people.
- In 2019, 30% of homes in the region were considered overcrowded. 50% of homes of people living in poverty were overcrowded.
- Less than a third of vulnerable households have access to a computer at home.
Social Protection Responses and Health during COVID-19
- In 2019, only 47.2% of employed persons were affiliated or contributed to pension systems. One in four people aged 65 or over did not receive a pension.
- In most LAC countries, emergency social protection measures adopted covered less than two thirds of the population.
- A total of 64 cash transfer programs were implemented in 24 of 33 countries. However, more than half of the interventions directly benefited less than 10% of the population, and consisted of additional amounts of less than a minimum monthly wage.
- In LAC, 30% of people do not have access to free public health care, due to the lack of health insurance coverage.
- Not one country in the LAC region expanded health insurance or enabled emergency insurance during the pandemic.
- Except from Argentina, Cuba and Uruguay, no other country in the region spends 6% of their GDP in public health, the minimum amount to secure universal healthcare established by the Pan American Health Organization (PAHO)
- Due to the lack of effective access to free and public health, millions of families cover their health expenditures from their savings. Out-of-pocket expenses represent 28% of the total health spending in the region
Taxation and Inequality in LAC
- LAC countries collect less taxes as a percentage of GDP compared to countries with a similar level of development. On average, the region only collects 22% of GDP in taxes, compared to 33% for OECD countries
- In LAC, collection depends heavily on indirect taxes, such as consumption taxes, which disproportionately affect women and other groups who are overrepresented among the poor.
- In 2019, countries in the region collected, on average, 46% of their total tax revenues from indirect taxes, compared to only one third from direct taxes.
- Tax evasion in LAC has led to hundreds of billions of dollars of lost public revenue each year. In 2018, LAC lost approximately US$350 billion, 6.1% of GDP the region’s GDP. This amount would be sufficient to cover the minimum resources to secure universal health in the region.
- LAC countries are estimated to lose annually US$40.1 billion to corporate tax abuse. It is estimated that with the income that has been lost over the last 10 years, the region could have guaranteed access to drinking water to 492,632 people or have prevented the death of 42,281 children.