Impact of the global crisis on the achievement of the MDGs in Latin America

Progress towards the MDGs is expected to slow as a consequence of the global economic downturn. This study uses a dynamic-recursive CGE analysis for six Latin American countries and finds that a projected recession in 2009-2010, followed by a slow and gradual recovery, would put some of the region’s lowincome countries substantially further off track towards several of the goals. Extra spending of 1.5 to 2.0 per cent of GDP per year until 2015 would be required to achieve the goals, and this would come on top of another 2 to 7 per cent of GDP per annum of additional spending estimated in absence of the crisis. Additional costs owing to the crisis would stretch government finances should recovery and sustained growth not set in swiftly. At the same time, however, the additional public spending on education, health and water and sanitation is shown to contribute to recovery as part of a counter-cyclical response, which would be stronger if complemented by investments in public infrastructure. For full recovery, however, other factors need to contribute as well, especially the resumption of external demand which in turn would require globally concerted stimulus measures to take effect.