The Latin American Economic Outlook analyses issues related to Latin America’s economic and social development. Ever since the launch of the first edition in November 2007, the report has offered a comparison of Latin American performance with that of other countries and regions around the world sharing experiences and good practices.

GDP growth in Latin America will be negative for the second consecutive year in 2016 (between -0.5% and -1.0%), a contraction the region has not seen since the early 1980s. This evolution is testing Latin America’s socio-economic progress – notably the reduction of poverty and inequality and the expansion of the middle class. Around 7 million Latin Americans became poor in 2015, increasing the region’s total poverty rate to 29.2% or 175 million people. Moreover, between 25 and 30 million vulnerable middleclass Latin Americans, one of out of three whom exited poverty during the recent period of economic growth, face the risk of falling back into poverty in the near future.

The Latin American Economic Outlook 2017 analyses the attitudes, challenges and opportunities of Latin America’s youth. Youth in Latin America and the Caribbean (LAC) aged 15 to 29 number more than 163 million – around a quarter of the region’s total population. The region’s once promising economy is now slowing down, challenging the social, political and economic progress of the last decade. As such, young people stand at a crossroads, embodying the region’s promise and perils.

This chapter sets the scene for the entire publication by offering an overview of the recent economic trends as well as of the main opportunities and challenges faced by youth in Latin America. It also explores how better skills and entrepreneurship opportunities can provide better prospects for youth inclusion today and for the future. Finally, the chapter summarises a set of policy goals and recommendations emerging from the analysis conducted in the following chapters.

Latin America must return to the path of strong economic inclusive growth. The prolonged economic slowdown in the region confirms that potential growth is weaker than previously expected. This evolution will test the robustness of the socio-economic progress achieved in the previous decade, especially the strong reduction in poverty levels and the emergence of a middle class. This chapter assesses Latin America’s growth prospects in a more challenging international environment and explores its consequences on the region’s labour markets and key socio-economic indicators such as poverty and inequality. In addition, it analyses economic policy options with an emphasis on investment in infrastructure and skills to boost inclusive growth under a sustainable and credible fiscal framework.

Most countries in Latin America still stand to reap the benefits of the youth dividend because of their demographics. However, for this to happen the Latin America and Caribbean (LAC) region needs greater investments in young people, including their inclusion into economic, political and social processes. This chapter analyses the gaps of youth inclusion in the LAC region. It provides a rich statistical portrait of how the labour market position and social inclusion of youth have evolved along a number of key dimensions, and identifies a comprehensive set of policy levers to tackle these gaps. The chapter is composed of two parts. First, it provides an overview of the labour market performance of youth in the past decade, focusing on both measures of the labour market situation and job quality. Second, it analyses other indicators of inclusion such as health, satisfaction with life and future outlooks, civic and social engagement, and crime and perceived security to give a more complete picture of youth inclusion in the region. Finally, the chapter sketches a set of policy goals and recommendations to foster youth inclusion in Latin American countries.

Skills are essential for youth to make the transition into adult life, to contribute to knowledge-based and skills-based economies, and to participate in society. As such, they allow individuals to become engaged in a country’s growth and development. Education serves as one of the main sources of acquiring skills. This chapter analyses the educational attainment and skills endowment of youth in the Latin America and Caribbean (LAC) region by providing a rich statistical portrait of youth education participation and performance. The chapter provides an overview of education attainment, as well as an analysis of the reading, mathematics, science and technology aptitudes of youth in the past decade. It also describes the main results of youth training programmes, one of the region’s main policy responses to endow early education leavers with skills to participate in labour markets. Finally, the chapter sketches a set of policy goals and recommendations to improve education and provide better skills to youth in LAC countries.

Youth entrepreneurship can be a vehicle for enhancing individuals’ employability and social mobility, while also inducing productive transformation. Whereas attitudes towards entrepreneurship are similar, Latin American young entrepreneurs tend to be less educated and come from more disadvantaged socio-economic backgrounds than in OECD economies. With fewer resources, skills and experience, they face higher barriers for business creation in accessing finance, acquiring entrepreneurial skills, integrating business networks, creating new markets and overcoming regulatory barriers. Public policy in these areas has improved entrepreneurship prospects to some extent. Programme evaluations suggest that youth entrepreneurship programmes have been effective for improving labour market outcomes. Strengthening those programme components which are most effective, such as business training, counselling and mentoring, can substantially improve the effectiveness of future programmes.

Strong transformations – mainly driven by technological change – are taking place in the world of work, politics and cities. Technologies applied to jobs are replacing some tasks as well as creating new ones, thus shifting demand for skills. New ways of voicing social demands are emerging, playing a catalyst role to current discontent and detachment from the political system mainly shown by youth in LAC. The process of urbanisation continues in the region, and cities in the near future will be more densely populated, diverse, interconnected, economically vibrant and complex than the ones today. All these transformations are bringing about challenges and opportunities, picturing a future that will be very different in nature to the world we know today. Policies should prepare youth to embrace change, face new challenges and make the most of emerging opportunities.