Posted on December 11, 2013 by iMFdirect
By Alejandro Werner
(Versions Español and Português)
Public finances in most Latin American countries strengthened significantly before the global financial crisis. Since 2009, countries have generally increased public deficits, drawing down on their fiscal coffers.
These expansionary policies continue and are yet to be reversed. With further pressures likely to build over the period ahead—as economic growth has slowed, commodity prices have softened, and external funding costs are bound to rise—now is the right time to rethink fiscal policies across the region.
Filed under: Economic research, Emerging Markets, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Latin America, Public debt | Tagged: Brazil, Chile, Colombia, fiscal policy, Fiscal Stimulus, infrastructure, labor market, Mexico, Peru, public deficits, public finances, public spending | Leave a Comment »
Posted on December 21, 2012 by iMFdirect
The planet’s most successful species are the great cooperators: ants, bees, termites, and humans.
In an article in the new issue of Finance & Development magazine, President Bill Clinton shares his experience working with governments, business, and civil society as part of his Clinton Global Initiative.
He says they are making the most progress in places where people have formed networks of creative cooperation where stakeholders come together to do things better, faster and cheaper than any could alone.
Filed under: Advanced Economies, Africa, Asia, Civil Society, Debt Relief, Economic Crisis, Emerging Markets, Employment, Europe, Finance, Fiscal policy, Globalization, growth, IMF, Inequality, International Monetary Fund, Latin America, Middle East, Multilateral Cooperation | Tagged: Africa, agriculture, Bolsa Familia, Brazil, business, business leaders, Canada, capital markets, Clinton Global Initiative, Coca-Cola, Colombia, cooperation, developing countries, domestic food security, Economics, economy, exports, farmers, Fundacíon Carlos Slim, Fundacíon Pies Descalzos, Gap Inc., governments, growth, Haiti, HIV/AIDS, IMF, iMFdirect, imports, infrastructure, International Monetary Fund, investment, Ira Magaziner, Ireland, Latin America, Malawi, mining industry, networks, NGOs, Norway, philanthropists, poverty, President Bill Clinton, private sector, small and medium-sized enterprises, the United Kingdom, tourism, United Nations General Assembly, vocational training | 4 Comments »
Posted on December 17, 2012 by iMFdirect
by María González-Miranda
(Version in Español)
Four years after the Lehman Brothers crisis, private companies in the largest and most financially integrated Latin American countries are doing relatively well, despite continuous bouts of global uncertainty. Like firms in other high-performing emerging markets in Asia, companies in Brazil, Chile, Colombia, Mexico, and Peru (the “LA5”) have benefited from abundant external financing, strong domestic credit, and generally robust demand growth.
These favorable conditions have resulted in robust corporate profitability and valuation, reasonably contained debt ratios, and lower short-term maturity exposures than those observed in other emerging markets.
But some vulnerabilities are starting to build up.
Filed under: Asia, Economic Crisis, Emerging Markets, Finance, growth, IMF, International Monetary Fund, Latin America | Tagged: Brazil, Chile, Colombia, corporate sector, currency, growth, IMF, International Monetary Fund, LA5, Latin America, María González-Miranda, Mexico, Peru, vulnerable | 1 Comment »
Posted on December 6, 2012 by iMFdirect
By Christine Lagarde
(Version in Español)
Next week, I will travel to Latin America—my second visit to the region since November 2011. I return with increased optimism, as much of Latin America continues its impressive transformation that started a decade ago.
The region remains resilient to the recent bouts in global volatility, and many countries continue to expand at a healthy pace. An increasing number of people are escaping the perils of poverty to join a growing and increasingly vibrant middle class.
Filed under: Economic Crisis, Emerging Markets, Español, Fiscal policy, growth, IMF, Inequality, International Monetary Fund, Latin America, Public debt | Tagged: advanced economies, Asia, business leaders, capital flow management measures, capital flows, Central America, Chile, Civil Society, Colombia, commodity exporters, competitiveness, debt levels, demand, domestic demand, Economics, education, emerging economies, Europe, exports, external financing conditions, financial sector, financial supervision and regulation, fiscal balances, fiscal cliff United States, fiscal consolidation, fiscal policy, global crisis, global risks, growth, high commodity prices, iMFdirect, inequality, infrastructure, International Monetary Fund, Mexico, middle class, monetary policy, policymakers, poverty, productivity, reforms, students, tailwinds, taxes | 5 Comments »
Posted on November 19, 2012 by iMFdirect
By Nicolas Magud and Evridiki Tsounta
(Version in Español)
Many Latin American countries have strengthened their monetary policy frameworks in recent years to keep the rate of inflation in check. Some of them have adopted an inflation target and use the policy interest rate as the main tool to achieve that target.
But how do central bankers know whether monetary policy is expansionary or contractionary? Policymakers would need to know how the current policy rate compares to a benchmark or neutral rate.
The neutral interest rate is the real interest rate consistent with the economy operating at full employment and stable inflation. If the economy is operating above its potential capacity and inflation is rising, policymakers should increase the policy interest rate above the neutral level to cool down the economy. Conversely, if the economy is operating below its full employment level, interest rates may need to be lowered below the neutral level.
Filed under: Economic research, Emerging Markets, Employment, Español, Finance, growth, Inequality, Latin America, Low-income countries, Politics, Public debt | Tagged: Brazil, business cycle, Chile, Colombia, Costa Rica, EMBI, Evridiki Tsounta, Guatemala, inflation targeting, interest rates, Mexico, monetary policy, neutral rate, Nicolas Magud, Paraguay, Peru, the Dominican Republic, Uruguay | 3 Comments »
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 »
Posted on May 10, 2012 by iMFdirect
By Luis Cubeddu, Camilo E. Tovar, and Evridiki Tsounta
(Version in Español)
Housing construction projects are sprouting up across much of Latin America and mortgage credit is also growing very fast. Does this sound familiar? It should!
Easy external financing conditions and high commodity prices have led to important improvements in living standards and credit deepening in many countries of the region over the past decade. The credit expansion has been particularly impressive in the mortgage sector, where legal reforms and government subsidies have also played a role.
Although mortgage credit in Latin American countries is relatively low by international standards —at just 7 percent of GDP versus over 20 percent in emerging Asia and over 65 percent in the United States—it has grown at an impressive annual average real rate of 14 percent since 2003, with Brazil leading the pack. Home prices have also risen sharply over this period, particularly in countries where mortgage credit has expanded the fastest (for more details see Chapter 5 in our latest Western Hemisphere Regional Economic Outlook).
So, are housing vulnerabilities emerging?
Filed under: Economic Crisis, Economic outlook, Economic research, Employment, Finance, Financial Crisis, Financial regulation, growth, Inequality, International Monetary Fund, Latin America, Public debt | Tagged: Brazil, Camilo E. Tovar, Chile, Colombia, credit, Evridiki Tsounta, housing, housing market, Luis Cubeddu, Mexico, Minha Casa, Minha Vida, Peru, Uruguay | 5 Comments »
Posted on April 25, 2012 by iMFdirect
By Nicolás Eyzaguirre
(Version in Español)
Here in Washington D.C., Spring is showing its early signs, so we naturally feel a bit more upbeat. But spring comes in fits and starts—a day of sunshine, followed by cold rain, followed by sunshine again. So, we carry an umbrella on sunny days—but also have sunscreen ready. It’s much the same for most of Latin America and the Caribbean, as we discuss in our Regional Economic Outlook for the Western Hemisphere. So, on a spring day, how do we see things?
Well, before explaining what I mean, let me start with a broad overview.
Most of Latin America stands out from much of the rest of the world—not for great economic performance, but for good performance in a subpar environment. Growth is generally solid, despite a slowdown late last year owing to policy tightening and global volatility. Under our baseline scenario, we expect regional growth to moderate to near 3¾ percent in 2012, down from 4½ percent last year (but modestly up from our January projections).
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Emerging Markets, Employment, G-20, growth, IMF, International Monetary Fund, Latin America, LICs, Multilateral Cooperation | Tagged: Brazil, Caribbean, Chile, Colombia, iMFdirect blog, Nicolás Eyzaguirre, Peru, spillovers, Uruguay | 3 Comments »
Posted on October 21, 2009 by iMFdirect
By Nicolás Eyzaguirre
(Version en español)
Although this time the external shocks were very strong in this year of global crisis, the Latin American and Caribbean (LAC) region has performed notably better than in the past, and also better than many other emerging market countries.
This improvement can be attributed to the fact that the region faced the crisis equipped with economic policy frameworks that were more solid and credible than in the past, and with smaller financial, external, and fiscal vulnerabilities. This allowed a number of countries of the region to implement countercyclical monetary and fiscal policies.
Figure 1 shows a measure of the benefits that this better preparation has brought. It compares the fall in average growth of GDP actually observed in Brazil, Chile, Colombia, Mexico, and Peru (solid line) with our best estimate of the decline that would have occurred if their policy frameworks and vulnerabilities had not been changed (dashed line). The estimates here suggest that these countries were able to “save” about 4 percentage points of GDP during the crisis, thanks to their better preparations for confronting external shocks.
Figure 2 shows that various countries of the region had the room or “space” to apply countercyclical fiscal and monetary policies during this crisis. The figure depicts changes in interest rates (vertical axis) and in fiscal deficits (horizontal axis) for each country of the LAC region, where the colors group countries according to certain general characteristics and the diameter of the circles represent the relative size of each economy.
Filed under: Economic Crisis, Financial Crisis, Fiscal Stimulus | Tagged: Brazil, Caribbean, Chila, Colombia, commodity prices, countercyclical policies, Fiscal Stimulus, interest rates, Latin America, Mexico, Peru | 1 Comment »