Latin America’s pandemic recovery will be patchy

Outlook

While post-pandemic recovery in parts of Latin America and the Caribbean has been stronger than expected, that recovery varies sharply across countries and remains fragile.

Exports have recovered strongly, up by around 25%, though this relates primarily to high global prices for food and mining commodities. Countries dependent on tourism, such as those in Central America and the Caribbean, potentially face a more difficult outlook, especially if new COVID waves emerge in tourists’ countries of origin.

Commodity-driven growth will bolster fiscal resources but raise social and political pressures over how these are used, especially if the employment impact is limited.

Impacts

• The impact of strong copper prices will boost fiscal resources in Chile and Peru but also political instability.
• High consumer prices driven in part by global food prices will shake policy-making in Brazil and Argentina.
• Early growth forecasts may be revised upward, as in Peru -- but also downward, as is likely in Brazil.
• Continuing sluggishness in vaccine distribution in some countries could mar or delay recovery prospects.