Latin America is emerging from the COVID-19 crisis, but the recovery is weaker than expected, and the scars on the economy and society will take years to fade. The need to recover dynamic, inclusive, and sustainable growth to redress both the legacy of the pandemic and long-standing social needs has never been more acute. In turn, despite the emergence of some industrial “green shoots” offering new avenues for growth, addressing long-unattended agendas that prevent the region from taking off has never been more urgent.

In this spirit, Chapter 1 of this report lays out the recent social and macroeconomic evolution of the region and the near-term challenges it faces emerging from the pandemic. Chapter 2 then explores several of the areas where key growth-advancing reforms could be undertaken in the constrained fiscal context, focusing especially on spending more efficiently and reallocating resources to more productive uses.