Latin American Economic Outlook 2019

Development in Transition

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Latin America and the Caribbean has seen a remarkable socio-economic progress since the beginning of the century. Countries strengthened their macroeconomic situations, living standards improved, and poverty and inequality declined. Yet, large structural vulnerabilities remain and new ones have emerged. Many of these are linked to countries’ transition to higher income and development levels. The Latin American Economic Outlook 2019: Development in Transition (LEO 2019) presents a fresh analytical approach to the region’s development trajectories. It assesses four development traps relating to productivity, social vulnerability, institutions and the environment. It outlines local opportunities for responding to these traps and seeks ways of improving the interactions and interlinkages between global public goods and national development agendas, all in the context of the United Nations 2030 Agenda. LEO 2019 calls for improving domestic capacities and adopting a new vision of international co-operation as a facilitator to support efforts to achieve sustainable development for all throughout the region.

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Socio-economic risks and challenges: A macro-perspective

Latin America and the Caribbean (LAC) is experiencing a subdued recovery. Current growth rates are below the previous decade and will be insufficient to close the income gap with advanced economies. The general macroeconomic outlook still points to significant heterogeneity across countries. This highlights differences in exposure to external shocks, main trade partners, policy space and frameworks, and idiosyncratic supply shocks. The international context presents several risks for the region and current economic growth is insufficient to defend the socio-economic achievements of the last decade, with poverty and inequality reductions on hold. This socio-economic performance highlights both new and persistent structural challenges in the region. Low potential economic growth, persistent high inequality rates and increasing poverty levels are all symptoms of key development traps.

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