The Latin American Economic Outlook (LEO) analyses critical aspects related to sustainable and inclusive development in Latin America and the Caribbean (LAC). Since the first LEO launch in November 2007, the annual report has compared LAC’s performance with that of other regions, analysed main development challenges and put forward policy recommendations, experiences and good practices.

Latin America and the Caribbean (LAC) has enormous potential to secure a stronger and more sustainable development trajectory. To seize this potential, the region needs a more ambitious and comprehensive investment agenda. The 16th edition of the Latin American Economic Outlook: Investing in Sustainable Development proposes strategies to boost investment in the LAC region, to help support policy makers, the private sector and international partners.

Countries in the Latin America and the Caribbean (LAC) region have enormous potential to embark on a stronger and more sustainable development trajectory. Yet, to seize that potential, the region needs a more ambitious and comprehensive investment agenda.

Latin America and the Caribbean (LAC) needs an ambitious and comprehensive investment agenda to embark on a stronger and more sustainable development trajectory. To close existing investment gaps and overcome the region’s structural challenges, it is essential to scale up domestic and foreign investment. These investments should be a catalyst for better quality jobs and an upgraded production structure, harnessing the potential of LAC’s endowments and of the green and digital transitions. Strong public institutions are fundamental to promoting effective and efficient public and private investments and aligning them with national development strategies and social priorities. Moreover, innovative financing mechanisms, a renewed role for development finance institutions and reinvigorated international partnerships are key aspects to make this new investment agenda an instrument that sets the region on a path towards greater well-being for Latin Americans.

This chapter describes the challenging economic context and critical factors driving a slowdown in economic activity in Latin America and the Caribbean (LAC) in 2023 following a rebound in growth after the COVID-19 pandemic. It also presents the socioeconomic challenges facing the region, where poverty and extreme poverty remain above pre-pandemic levels in more than half of LAC countries. The chapter first analyses macroeconomic policy in LAC, with a special focus on debt and taxes. It then reviews social conditions, presenting recent developments concerning poverty, inequality, and informality. Key policy messages point to the need to promote further and better investment to achieve more dynamic and sustainable growth and generate quality employment. It also highlights the need to protect the most vulnerable and, at the same time, ensure price stability.

This chapter presents recent investment trends in Latin America and the Caribbean (LAC), with a focus on strategic and sustainable investment in public infrastructure. First, the chapter highlights the general low levels of investment in the region, examining the roles of both the public and private sectors. Second, it analyses how quality public infrastructure in energy, transport, telecommunications and water can contribute to creating a more sustainable and inclusive future. Third, the chapter stresses that good governance and transparency can enhance the investment climate. Fourth, it presents the main trends of public-private partnerships (PPPs) and how they can accelerate the development of strategic sectors. Fifth, the chapter considers the benefits of foreign direct investment (FDI) in terms of job creation, productivity and innovation. The chapter concludes with key policy messages to guide these efforts.

More and better investments could help transform the production structure of the Latin America and the Caribbean (LAC) region to advance a more sustainable and just development model that creates quality formal jobs. This chapter analyses the current structure of production in the region. It explores the dynamics of the labour market, the importance of advancing a renewed investment agenda to create formal jobs and the role of human talent in the production transformation. Finally, the chapter identifies strategic sectors to drive investment and advance sustainable development. The chapter concludes with key policy messages.

This chapter examines key elements necessary to mobilise investment and drive a production transformation that brings greater well-being for all citizens in Latin America and the Caribbean (LAC). It emphasises the vital role of public institutions, which are key to creating the conditions conducive to investment and to making the production transformation more connected to the demands of citizens and the broader development strategies of LAC countries. The chapter also explores financing mechanisms that can help to unlock the region’s financial markets. Public development finance institutions (DFIs) and innovative debt instruments such as green, social and sustainability-linked (GSSS) bonds can be used to boost private and public investment. The chapter concludes with key policy messages.

Countries in Latin America and the Caribbean (LAC) must forge stronger, modernised and strategic alliances to attract investments that drive the region’s production transformation. New tools in development co-operation, such as blended finance, present an opportunity for LAC to mobilise greater investments through private-sector engagement. To attract investments with the potential to transform the region’s economic and productive structures, it is key to maximise the potential of international investment treaties, foster an environment for sustainable finance, provide capacity building and technology transfer, establish co-ordination platforms, and promote linkages to support local and national development. Strengthening international partnerships that stimulate co-operation, investment promotion and policy dialogue will boost LAC’s production transformation goals and have positive social impacts. Regional integration is an important step for reaching sustainable production transformation through more and more strategic investment. Finally, maximising the EU-LAC Global Gateway Investment Agenda can promote investments that drive the transformation of LAC’s development model.