Navigating Through Global Cross Currents: Latest Outlook for Latin America and the Caribbean


Event onlyBy Alejandro Werner

Versions in Português (Portuguese), and Español (Spanish)

The global landscape has changed since our last update in October 2016. These changes have been mainly shaped by:

  • An anticipated shift in the U.S. policy mix, higher growth and inflation, and a stronger dollar. In the United States—while potential policy changes remain uncertain—fiscal policy is likely to become expansionary, while monetary policy is expected to tighten faster than previously expected because of stronger demand and inflation pressures. As a result, growth is projected to rise to 2.3 percent in 2017 and 2.5 percent in 2018—a cumulative increase in GDP of ½ percentage point relative to the October forecast. The expected change in the policy mix and growth has led to an increase in global long-term interest rates, a stronger dollar in real effective terms, and a moderation of capital flows to Latin America.
  • Improved outlook for other advanced economies and China for 2017–18, reflecting somewhat stronger activity in the second half of 2016 as well as projected policy stimulus.
  • Some recovery in commodity prices, especially metal and oil prices, on the back of strong infrastructure and real estate investment in China, expectations of fiscal easing in the United States, and agreement among major petroleum producers to cut supply.

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What the Fed Rate Rise Means for Corporate Debt in Emerging Markets


By Adrian Alter and Selim Elekdag

Versions in عربي (Arabic), and Español (Spanish)

In December 2016, the U.S. Fed raised interest rates for the first time in a year, and said they planned more increases in 2017.  Emerging market currencies took a bit of a dive, but overall investors didn’t overreact and run for the doors with their money.  For the bigger picture, you can read IMF Chief Economist Maurice Obstfeld’s blog that outlines how the U.S. election and Fed decision will impact the global economy.  Continue reading

Redesigning Argentina’s Economic Landscape


By Roberto Cardarelli

Versions in Português (Portuguese), and Español (Spanish)

Most people know Argentina as the land of tango, Malbec, and some of the greatest soccer players of all times. But Argentina is also famous for being home to some of the most diverse and extreme landscapes of the world—from subtropical rainforests and Iguazu Falls in the north to the glaciers of Perito Moreno in the south, and from the lowest site in South America (Laguna del Carbón) to the highest elevation in the Americas (Aconcagua mountain).

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Addition by Subtraction: How Diasporas Can Boost Home-Country Growth


Pritha Mitra-blogpicBy Pritha Mitra

Version in عربي (Arabic)

Every year, millions of people leave their countries of birth in search of better opportunities abroad. Often, these migrants are among the most talented workers in their home countries. At first glance, this is a loss for the home countries, which invested considerable time and money in educating and developing these people, only to watch them leave. But look again.

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Learning to Adjust: The Effects of Currency Depreciations on Inflation in Latin America


By Yan Carrière-Swallow and Bertrand Gruss

(Versions in Español and Português)

Falling global commodity prices and the normalization of monetary policy in the United States have contributed to widespread currency depreciations in Latin America. In theory, a falling currency is expected to create inflation by driving up the price of imported goods and services—triggering what economists call exchange rate pass-through.

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Unemployment: Troubles Ahead for Emerging Markets


By Prakash Loungani and Zidong An

Version in Español (Spanish)

Forecasts of real GDP growth attract a lot of media attention. But what matters more to the person on the street is how growth translates into jobs. Unfortunately, the mediocre growth outlook of recent years may lead to a disturbing outlook for jobs, particularly among fuel-exporting countries and in the Latin America and Caribbean region.

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Latin America and the Caribbean in 2016: Adjusting to a Harsher Reality


Event only
Alejandro Werner

By Alejandro Werner

(Versions in Español and Português)

It’s been a rough start to 2016, as seen by the recent bouts of financial volatility, stemming from uncertainties related to the slowdown in China, lower commodity prices, and divergent monetary policy in advanced economies.

The global recovery continues to struggle to gain its footing, with strains in some large emerging market economies weighing on growth prospects. For Latin America and the Caribbean, growth in 2016 is now expected to be negative for the second consecutive year—the first time since the debt crisis of 1982–83, which triggered the “lost decade” for the region (see table). Continue reading

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