Latam Charts: Second-Wave Effects  

• Latam new per-capita COVID-19 infection trends below northern peers

• Early signs of second-wave impact in leading and coincident indicators

LATAM NEW PER-CAPITA COVID-19 INFECTION TRENDS BELOW NORTHERN PEERS

As in most of the world, COVID-19’s second wave is beginning to rise in Latin America despite the mitigating effects of summer in the southern hemisphere, but new case numbers remain relatively muted in per capita terms. Seven-day rolling averages of new case numbers at end-2020 and in the first few weeks of 2021 are up substantially across the Latam-6 countries we cover (chart 1; also see the Key COVID-19 Charts appendix).

Still, leading trends on a per-capita basis in the Pacific Alliance countries (PACs)—Chile, Colombia, Mexico, and Peru—continue to look better than in their regional neighbours Argentina and Brazil, on par with new per-capita case counts in Canada, and much better than the ongoing surge in the US and the UK (chart 2). One caveat on these numbers is that the PACs’ relatively strong performance is underpinned by still-low new per-capita COVID-19 incidence in Mexico and to a lesser extent Peru (chart 3). Mexico’s relatively encouraging numbers on new per-capita inflections likely reflect limited testing rather than progress in containing a second wave. Mexico accounts for about 55% of the Pacific Alliance countries’ total population, so its data have a disproportionate effect on the PACs’ aggregate numbers.

EARLY SIGNS OF SECOND-WAVE IMPACT IN LEADING AND COINCIDENT INDICATORS

Following sustained rebounds in activity across most major economies in both Q3 and Q4 2020, signs of the impact of COVID-19’s second wave are beginning to assert themselves around the world in coincident and leading indicators for Q1-2021. Purchasing-managers’ indices for Q1-2021 in the Eurozone and the UK out on Friday, January 22, both pointed to deeper than expected dips in growth in response to new lockdown and contagion control measures. Similarly, Japan’s Jibun PMIs retreated more deeply into contractionary territory, while Australia’s services and manufacturing indicators cooled, but remained expansionary. See Scotiabank Economics’ Daily Points for January 22 for charts and analysis. Similarly, PMIs in Latin America ended 2020 on a downbeat, with a deepening contraction in Mexico’s manufacturing PMI for December and mixed results in Colombia’s December manufacturing PMI print.

High-frequency data in the Pacific Alliance for end-2020 and early-2021 tell mixed stories tied to contagion control measures and policy support efforts specific to each country. In Chile, Scotiabank credit- and debit-card transactions volumes have averaged 12% above year-ago levels so far in 2021, down only slightly from the average 10% y/y gains in December 2020 (chart 4). Household finances and retail activity continue to benefit from the two withdrawals of pension assets and substantial fiscal support. Chile’s total daily electricity production, a good proxy for economic activity, has averaged about 1% higher in January than in December (chart 5). In contrast, retail card transactions volumes at Scotiabank Colpatria in Colombia dropped about 55% from December’s pre-Christmas peak to January 15 owing to renewed restrictions in Bogota and other major cities (chart 6). Scotiabank Mexico’s retail credit-card volumes for the first two weeks of January are down about 14%, on average, from December, but these transactions are highly seasonal and they are off only about -0.7% y/y from January 2020 (chart 7). Economy-wide transactions data for Peru are available only through end-November 2020, which pre-dates the recent upturn in new COVID-19 cases in January 2021 (chart 8). As we noted in our January 20 Latam Daily, though, some coincident real-economy indicators point to a strong hand-off into 2021: cement sales, which provide a good proxy of construction activity, rose 20% y/y in December 2020 (chart 9) and imply -2% y/y GDP growth in December 2020, the best performance since March.

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