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The plight of Peru illustrates the danger of

COVID-19 to developing countries

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Image: REUTERS/David Mercado - RC2YLF9WLQ29

17 Jun 2020
The pandemic’s heavy toll on people in Peru points to its disproportionate
John Letzing
impact on many developing countries.
Digital Editor, Strategic Intelligence, World
Economic Forum
The shadow economies and lack of social safety nets in these countries make
COVID-19 especially deadly.

Those wondering if the threat of COVID-19 is receding should take a hard look at
Peru.
The World Economic
The country, often cited as a poster child for economic development and home to
Forum COVID Action 32 million people, registered more than 2,000 pandemic-related deaths in the first
Platform two weeks of June alone. It now has the third-highest reported case total in the
World Health Organization’s Americas region, behind the US and Brazil.

Unlike those two bigger countries, Peru was widely recognized for proactive efforts
Learn more
to stem the spread of the coronavirus at an early stage. But while these efforts
contributed to a 40% decline in GDP in April compared with the same month last
year as official commercial activity dwindled, the outbreak only continued to

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The WHO recently warned that the pandemic is accelerating in a number of low-
Airbus plans to launch a and middle-income countries similar to Peru – where inadequate healthcare
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systems are an ongoing problem, and many people are unable to feed their families
without risking their lives by continuing to work unofficially.
Image: World Economic Forum
Peru’s difficulties with COVID-19 result in part from the predominance of its shadow
economy. More than half of the country’s non-agricultural workforce is believed to
be employed “informally” in a way that generally involves a hand-to-mouth
existence and lack of legal protections, yet generates an estimated one-fifth of
Peruvian GDP.
Countries with large informal economies have been especially vulnerable because
so many people were unable to stop working as the pandemic spread. At least, not
without losing their sole source of income, because they lack protective benefits like
unemployment insurance.
While many have therefore continued working, others have only been able to avoid
similar exposure to COVID-19 by seeing their livelihoods disappear entirely. One
survey of Peruvians during the lockdown found that nearly half of those with
informal work said they’d simply stopped receiving income entirely, compared with
just 16% of those with formal employment.
Image: World Economic Forum
Peru’s president announced one of the earliest coronavirus lockdowns in Latin
America in mid-March, and mobilized the army to enforce it. Yet, the impact of
COVID-19 has been devastating. This past Sunday, the Archbishop of Lima had his
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church filled with more than 5,000 portraits of the dead before delivering a homily
about a health system based on “business and not on mercy.”

Peru’s experience vividly demonstrates that even as some places attempt to

reopen for business and travel, COVID-19 continues to exact a lethal toll on much
of the world.

For more context, here are links to further reading from the World Economic Forum’s
Strategic Intelligence platform:

The pandemic has triggered a food crisis in Peru; a survey of families in

metropolitan Lima and Callao in the first week of May found that 14% were
unable to buy protein-containing food, mostly due to a new lack of financial
means, according to this report. (Southern Voice)

For one medical student, a stint providing medical care in remote Peruvian
villages cut off from health services provided a glimpse of what she’d be facing
as a resident in US hospitals overwhelmed by the pandemic after her return.
(STAT)

Many developing economies have made tremendous progress, but climate

change-induced natural disasters and pandemics can easily expose their
lingering lack of resilience, according to this analysis. (Center for Global
Development)

When two non-resident senior fellows at the Brookings Institution issued a call
in April for ideas to boost development in low- and middle-income countries to
help fight the coronavirus, they received a wave of submissions. (Brookings)
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 The pandemic has exposed the predominance of informal economies in many
African countries, and underlined a pressing need to formalize work there,
according to a former Governor of the Bank of Tanzania. (Institute for New
Economic Thinking)

Some governments are considering providing COVID-19 assistance to firms in

exchange for their registration in the formal economy, though direct cash
transfers may be the best way to help people where informality pervades,
according to this analysis. (LSE)

Africa’s informal traders have been hit especially hard by COVID-19, according
to this report, as 44 of the 54 countries on the continent – where one-third of the
people live below the poverty line – have closed their borders. This has
prevented many farmers from getting their produce to markets. (New African)

On the Strategic Intelligence platform, you can find visualizations and feeds of
expert analysis related to Peru, COVID-19 and hundreds of additional topics. You’ll
need to register to view.

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Written by

John Letzing, Digital Editor, Strategic Intelligence, World Economic Forum

The views expressed in this article are those of the author alone and not the World Economic Forum.

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