Fiscal Panorama of Latin America and the Caribbean 2020

Fiscal Policy Amid the Crisis Arising from the Coronavirus Disease (COVID-19) Pandemic

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The coronavirus disease (COVID-19) pandemic has generated a health, human and economic crisis without precedent in the past century. The region has responded rapidly, adopting packages of fiscal measures of diverse magnitude and scope. In this context, fiscal policy must play a key role in mitigating the human and economic impact in the short term, while also continuing to provide the impulse for achieving sustainable and inclusive growth in a post-COVID-19 world. As well as analysing the fiscal policy challenges of the current crisis, the Fiscal Panorama of Latin America and the Caribbean, 2020 provides a broad overview of the problems of tax evasion in the region. It looks at the challenges of measuring tax evasion and the measures the countries are taking to tackle it. It also compares the functional allocation of public expenditure in the countries of the region, as a factor that has implications for the achievement of the Sustainable Development Goals.

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Evolution of public finances in Latin America and the Caribbean in 2019

As noted in the Preliminary Overview of the Economies of Latin America and the Caribbean, 2019 (ECLAC, 2019a), changes in the main global macroeconomic indicators created an adverse context for fiscal policy in the countries of Latin America and the Caribbean in 2019. Global economic activity slowed to 2.5% year-on-year in 2019 —its lowest level since the 2008–2009 financial and economic crisis—after registering 3.1% in 2018 and 3.2% in 2017. International trade, as reflected by global trade volumes, contracted in 2019 against the backdrop of the economic slowdown and rising trade tensions between the United States and some of its trading partners, in particular China. In 2019, China’s growth slumped to its lowest levels in 30 years, down to 6.1% compared with 6.6% the previous year. The developed economies were not immune to this trend, with significant slowdowns seen in the eurozone and Japan. Only the United States registered robust growth, which was largely owed to a substantial fiscal stimulus measure.

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