The coronavirus (Covid-19) crisis has been an exceptional, unexpected and exogenous shock to Latin America and the Caribbean, where most of the countries were already suffering from anaemic or zero growth. The region confronts the crisis with structural challenges, including a vulnerable middle class, persistent inequalities, laggard productivity and constrained fiscal space. The persistence of structural bottlenecks caps the space for rapid recovery. In some countries, inequality reduction has stalled in the most unequal region in the world, and increases in poverty and indigence are expected in the context of the coronavirus (Covid-19) crisis. Against this scenario, innovative and effective actions have been implemented to contain the damage, but further efforts will be needed at the national and international level for a sustainable recovery. Digital transformation proved to be a useful tool during the pandemic, but only for some firms and citizens. If gaps in coverage, access and use are properly addressed, digital transformation will play an essential role in the economic recovery and holds the potential to help overcome the persistent challenges and spur more sustainable and inclusive development.