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Report on the Latin American economy. First half of 2021. Outlook, vulnerabilities and policy space

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  • International Economics and Euro Area Department

Abstract

The economic recovery in Latin America continued into the first part of this year, but lost momentum owing to the adverse course of the pandemic. Against this macro-financial backdrop, the region’s banking systems remain healthy, although some indicators, such as bank profitability, have started to feel the effects of the persistence of the crisis. The strength of the recovery will be chiefly determined by the course of the pandemic, in particular by how fast the vaccine is rolled out and its effectiveness. It will also hinge on the momentum of foreign demand and commodity prices, the resolution of potential social tensions in the region, global financial conditions, the degree of support from economic policies, whose headroom has narrowed, and regional and global economic safety nets. Given the high level of uncertainty surrounding the economic outlook, the report presents alternative scenarios relating to a series of epidemiological, economic and financial variables. However, it should be noted that, broadly speaking, the region has fewer structural vulnerabilities now than in previous episodes of turmoil. In any event, the complex economic situation reinforces the need for institutional and economic reform agendas that address the region’s structural problems.

Suggested Citation

  • International Economics and Euro Area Department, 2021. "Report on the Latin American economy. First half of 2021. Outlook, vulnerabilities and policy space," Economic Bulletin, Banco de España, issue 2/2021.
  • Handle: RePEc:bde:journl:y:2021:i:06:d:aa:n:14
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    References listed on IDEAS

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    More about this item

    Keywords

    health crisis; mobility; commodities; financing conditions; capital flows; household savings; economic policies; public debt sustainability; global and regional safety net.;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F01 - International Economics - - General - - - Global Outlook
    • F30 - International Economics - - International Finance - - - General
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications

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