Posted on November 24, 2014 by iMFdirect
By Sean Hagan
(version in Español)
To restructure or not to restructure? That is a question few governments would like to face. Yet, if a country does find itself with an unsustainable debt burden, one way or another, it will have to be restructured. And if that time comes, it is better for the debtor, creditors, and the entire financial system that the restructuring be carried out in a prompt, predictable, and orderly manner.
The global financial crisis ushered in a new wave of sovereign debt crises that has reinvigorated discussions over the current framework for sovereign debt restructuring. The experience with Greece’s debt restructuring in 2012 and the ongoing litigation involving Argentina, in particular, provide a salutary reminder that vulnerabilities remain.
Filed under: Economic Crisis, Economic research, Europe, Finance, Financial Crisis, Fiscal policy, growth, Latin America, Public debt, Reform | Tagged: Argentina, bonds, debt restructuring, financial restructuring, government debt, Greece, Kazakhstan, Mexico, sovereign debt, U.S. Treasury, Vietnam | Leave a comment »
Posted on October 29, 2014 by iMFdirect
By Bertrand Gruss
(version in Español and Português)
It looks as if labor markets in Latin America have not been following the economic news—literally! Economic activity has slowed markedly in the last three years, with some South American countries slipping into outright recession more recently. Yet, labor markets still appear remarkably strong, with unemployment rates, in particular, hovering at record-low levels in most countries (Figure 1). So, what is going on? Has the region discovered how to defy the law of gravity?
Filed under: Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, growth, IMF, International Monetary Fund, Latin America, Reform, unemployment | Tagged: Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, education, infrastructure, labor market, Latin America, Mexico, Peru, Regional Economic Outlook: Western Hemisphere, South America, unemployment rate, Uruguay | Leave a comment »
Posted on June 4, 2014 by iMFdirect
By Jesus Gonzalez-Garcia and Francesco Grigoli
(Version in Español)
Government ownership of banks is still common around the world, despite the large number of privatizations that took place over the past four decades as governments reduced their role in the economy. On average, state-owned banks hold 21 percent of the assets of the banking system worldwide. In Latin American and Caribbean countries, the public banks’ share is about 15 percent, with some of them showing very large shares, for instance, Argentina, Brazil, Uruguay, and Costa Rica are all over 40 percent (see Figure 1).
State-owned banks play an important role in the financial system. They fulfill functions that are not performed by private banks, provide financing for projects that benefit the rest of the economy, and provide countercyclical lending (lending more when the economy is weak). But public banks usually respond to the needs of governments owing to the state’s obvious involvement in their administration. As a result, government’s participation in the banking system may weaken fiscal discipline by allowing the public sector to access financing that they would not obtain from other sources.
In our recent study, we use a panel dataset for 123 countries to test whether a larger presence of state-owned banks in the banking system is associated with more credit to the public sector, larger fiscal deficits, higher public debt ratios, and the crowding out of credit to the private sector.
Filed under: Economic outlook, Economic research, Emerging Markets, Español, Finance, Fiscal policy, Government, International Monetary Fund, Latin America, Public debt | Tagged: Argentina, bank credit, banking, big banks, Caribbean, Latin America, public sector, Uruguay | Leave a comment »
Posted on January 30, 2014 by iMFdirect
By Alejandro Werner
(Version in Español, Português)
Looking to the year ahead, how do we see the global economic landscape, and what will this mean for our region? This question is especially on people’s minds today, given the risks of deflation in advanced economies and of sustained turbulence in emerging markets.
Despite these risks, we expect that the region will grow a little faster than last year—increasing from 2.6 percent in 2013 to 3 percent in 2014. Stronger global demand is one part of the story, but not the whole story; volatility is likely to be a significant feature of the landscape ahead. And regional growth rates will still be in low gear compared to historical trends, and downside risks to growth remain. So, let’s start with the global scene.
Filed under: Economic outlook, Economic research, Emerging Markets, Employment, Financial Crisis, growth, IMF, International Monetary Fund, Latin America | Tagged: Alejandro Werner, Argentina, Brazil, Caribbean, Central America, Chile, Colombia, financial market, inflation, Latin America, Mexico, Peru, South America, tourism, United States, Uruguay, Venezuela, Western Hemisphere | Leave a comment »
Posted on May 29, 2012 by iMFdirect
By Gustavo Adler and Sebastián Sosa
(Version in Español)
The risks that policies and shocks in major economies can spillover on other countries and regions have become a matter of renewed concern since the global crisis of 2008–09. Brazil is South America’s giant; how important is its influence on neighboring countries?
Brazil accounts for 60 percent of South America’s output and its economic fluctuations are closely correlated with those of many of its neighboring countries. This would appear to suggest that economic activity in Brazil’s neighbors is strongly influenced by Brazil’s business cycle.
But these close comovements could also reflect common global factors that affect all South American countries similarly, such as commodity prices, international financial conditions, and global demand.
Our latest Regional Economic Outlook: Western Hemisphere examines this question, quantifying the importance of spillovers from Brazil to the rest of South America.
Filed under: Economic outlook, Economic research, Emerging Markets, Employment, Español, Finance, Globalization, growth, IMF, Inequality, International Monetary Fund, Investment, Latin America, Politics | Tagged: Andes, Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Gustavo Adler, Mercosur, Paraguay, Peru, regional economic outlook, Sebastián Sosa, shocks, South America, Southern Cone, spillovers, transmission, Uruguay, Venezuela | 2 Comments »