As South America becomes the epicentre of Covid-19, we decided to estimate the downside risk to GDP caused by Covid-19 by running a simulation based on duration and severity of lockdowns across countries.
Our analysis makes for sobering reading. Our central case predicts an average drop in GDP of 13% across South American economies, representing an economic cost of ca. $400 billion.
The social and political consequences of a sharp and prolonged downturn are yet to be fully felt, but they will be dire.