The UN Economic Commission for Latin America and the Caribbean on Wednesday slashed its projection for the region's GDP fall for 2020 from 9.1 to 7.7 percent.
ECLAC said the gradual reopening of economies shut down to combat the coronavirus pandemic and financial help for families and businesses, especially in the region's largest economy Brazil, had contributed to the improved forecast.
Alicia Bárcena, ECLAC's executive secretary, predicted the region would experience growth of 3.7 percent in 2021 but said economic activity would not return to pre-pandemic levels until 2024.
"The growth dynamic in 2021 is subject to high uncertainty related to the risk of pandemic outbreaks, to the agility in producing and distributing vaccines and the ability to maintain fiscal and monetary stimuli to support aggregate demand and the productive sectors," she said.
The economic crisis afflicting the region due to the pandemic "will be longer than we hoped," said ECLAC.
In 2020, every country in the region will end the year with an economic contraction due to the measures taken to combat the pandemic, including shutting down business, manufacturing, and closing borders.
The worst hit country in the region will be Venezuela with a 30 percent fall in GDP, while Paraguay weathered the storm the best with an economic slowdown of just 1.6 percent.
Brazil's economy will shrink 5.3 percent and Mexico's by nine percent.