The COVID-19 recovery in Latin America and the Caribbean (LAC) is slowing down, reflecting low potential growth and an increasingly complex international context driven by Russia’s war against Ukraine and an economic slowdown in China. The socio-economic consequences of COVID-19 linger, with poverty and extreme poverty still high. With macroeconomic policy space being reduced, most LAC countries will face the multidimensional challenge of balancing recovery stimulus, financing the green transition, and protecting the most vulnerable, particularly from the impact of inflationary pressures. After analysing the global context, this chapter presents the economic performance and critical factors affecting the pace and shape of the recovery in LAC. The chapter then analyses the weight of climate change on fiscal accounts and explores some options to mobilise further resources to promote the green transition. Before concluding, the chapter discusses the deteriorated post-COVID-19 social conditions, particularly poverty and inequality, and the need to strengthen social protection systems.