As in the rest of the world, Covid-19 has inflicted considerable pain in Latin America, both economically and socially. Prior to the pandemic, the region’s gross domestic product (GDP) was expected to grow at a rate of 1.8 percent in 2020, observed in 2019. Owing to the pandemic, however, the region’s economy will instead contract by an estimated 8.1 percent this year, according to the International Monetary Fund’s latest forecast. And while recovery is expected next year, its extent is likely to be limited, leaving economic output well below the pre-Covid level by the end of 2021.

The potential for “scarring” and solvency concerns further weigh on the Latin American outlook, while upside potential exists from technological breakthroughs in treatments and vaccines, which would allow for stronger global growth and regional performance. Concerted government intervention will be a modest recovery from the 0.2 percent growth required to assess the pandemic’s impact on poverty and inequality in the region.