(Version in Español)
Latin America has a long history of accidents that have occurred while navigating turbulent financial international waters. With risks looming over the world economy, should the region worry about new global financial waves?
Global financial markets have seen frequent bouts of severe stress since 2008, although this isn’t really anything new for the region. Global financial shocks have occurred on average every 2½ years since 1990, with significant effects on Latin America.
But how costly are these shocks in terms of domestic output, and is Latin America better placed to cope with them this time?
In Chapter 3 of the IMF’s latest Regional Economic Outlook: Western Hemisphere, we analyze whether changes in underlying fundamentals have made the region more or less vulnerable over time. The analysis, which complements our work on the effects of terms-of-trade shocks, looks at what country features and policies make a difference. We focus here solely on the impact of the financial shocks by isolating the effect from commodity prices and global demand shocks.
Filed under: Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Español, Financial Crisis, Globalization, growth, Investment, Latin America, Politics | Tagged: boom and bust, Brazil, Camilo E. Tovar, exchange rate, financial integration, Gustavo Adler, Latin America, Mexico, regional economic outlook, shock, simulations, terms of trade, Western Hemisphere | 2 Comments »