Digital transformation can help Latin America and the Caribbean (LAC) region recover more quickly from the COVID‑19 crisis, according to the Latin American Economic Outlook (LEO) 2020: Digital Transformation for Building Back Better.

LEO 2020 documents the pandemic’s dramatic impact on the most vulnerable and marginalised.

According to the report, microenterprises have been hit particularly hard with 2.7 million of them likely to close, resulting in the loss of 8.5 million jobs.

On the eve of the crisis, 40 per cent of workers in LAC economies did not have access to any form of social protection and 60 per cent worked informally.

“We expect more than 45 million additional people will fall into poverty. The socio-economic crisis makes a new development model more urgent than ever. Digitalisation could be a powerful tool to overcome the structural challenges of the region, only if it is considered as a comprehensive way to foster progressive structural change, through policies for the generation of new sectors, quality jobs, the development of capacities and innovation,” said Alicia Bárcena, Executive Secretary of ECLAC.

“The crisis has created the momentum for long-overdue reforms that can help spread the benefits of digital transformation to achieve inclusive and resilient growth. It also highlights the urgent need to bridge the digital divides between territories, families, students, workers and firms”, said Ángel Gurría, Secretary-General of the OECD.

According to LEO 2020, the crisis is exacerbating a set of interlinked, structural challenges, including high inequality and informality, low productivity, and deficient public services and institutions.

The good news is that digital transformation can help LAC economies out of the crisis by stimulating business innovation and new consumption models, transforming production systems and value chains, re-organising economic sectors, and introducing new conditions of competitiveness. Digital tools can also support better access to services, including health and education. Finally, they can help improve governance, putting citizens at the centre of policymaking.

The report is jointly produced by the Development Centre of the Organisation for Economic Co-operation and Development (OECD), the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), CAF Development Bank of Latin America and the European Commission.

—Joel Julien