"The economies of Latin America and the Caribbean remain in low gear, held back by a less favorable external environment and, in some cases, domestic supply constraints", the IMF said.
"Output in the region is projected to expand by 2¾ percent in 2013, the lowest rate in four years, with domestic demand remaining the main driver. Going forward, growth will edge up to 3 percent in 2014 as external demand strengthens gradually.
In the first half of this year, Mexico suffered an unexpectedly sharp downturn in activity, while Brazil continued to recover gradually from a slowdown that started in mid-2011, the report indicated. In the rest of Latin America, economic activity has moderated".
“The main challenge for our region in the coming years is to preserve macroeconomic and financial stability in what is likely to be a less favorable external environment, and to build strong foundations for sustainable growth,” said Alejandro Werner, Director of the IMF’s Western Hemisphere Department.
According to the report downside risks remain the main focus.
In the first place the slowing growth of the Chinese economy,the most important market for the
commodities exported from these countries. "Growth in China is projected to ease further to 7¼ percent in 2014 from 7½ percent this year. Lower medium-term growth expectations for China have been a key driver of the decline in commodity prices since the beginning of the year, although they remain at relatively high levels from a historical perspective".
Another risk comes from the future exit of the US from its extremely loose monetary policy,which could cause intense capital outflow pressures, high volatility in the bond prices and currencies of the region as it did in past months.
As the favourable high commodity prices and very low external financing costs subside, the key challenge for policymakers is to manage a smooth transition to more sustainable growth rates of GDP's.
Output is close to potential in many countries, external current account deficits have continued to widen, and fiscal balances are generally weaker than they were before the global financial crisis. Thus, gradual fiscal consolidation remains appropriate for most countries.
"Strong financial sector regulation and supervision will be critical to safeguard domestic financial stability in an environment of slower growth and more volatile capital flows.
In Central America, gradual fiscal consolidation is necessary to reduce public debt and increase fiscal space in most countries. The authorities will have to exercise expenditure restraint, including a reduction in untargeted oil subsidies.
In the Caribbean, fiscal, external, and financial vulnerabilities remain significant in the tourism-dependent economies. Fiscal consolidation is inevitable but will have to be supported by measures to address chronically weak competitiveness".
Source: IMF Regional Economic Outlook Update for the Western Hemisphere
October 11th,Washington D.C.
"Output in the region is projected to expand by 2¾ percent in 2013, the lowest rate in four years, with domestic demand remaining the main driver. Going forward, growth will edge up to 3 percent in 2014 as external demand strengthens gradually.
In the first half of this year, Mexico suffered an unexpectedly sharp downturn in activity, while Brazil continued to recover gradually from a slowdown that started in mid-2011, the report indicated. In the rest of Latin America, economic activity has moderated".
“The main challenge for our region in the coming years is to preserve macroeconomic and financial stability in what is likely to be a less favorable external environment, and to build strong foundations for sustainable growth,” said Alejandro Werner, Director of the IMF’s Western Hemisphere Department.
According to the report downside risks remain the main focus.
In the first place the slowing growth of the Chinese economy,the most important market for the
commodities exported from these countries. "Growth in China is projected to ease further to 7¼ percent in 2014 from 7½ percent this year. Lower medium-term growth expectations for China have been a key driver of the decline in commodity prices since the beginning of the year, although they remain at relatively high levels from a historical perspective".
Another risk comes from the future exit of the US from its extremely loose monetary policy,which could cause intense capital outflow pressures, high volatility in the bond prices and currencies of the region as it did in past months.
As the favourable high commodity prices and very low external financing costs subside, the key challenge for policymakers is to manage a smooth transition to more sustainable growth rates of GDP's.
Output is close to potential in many countries, external current account deficits have continued to widen, and fiscal balances are generally weaker than they were before the global financial crisis. Thus, gradual fiscal consolidation remains appropriate for most countries.
"Strong financial sector regulation and supervision will be critical to safeguard domestic financial stability in an environment of slower growth and more volatile capital flows.
In Central America, gradual fiscal consolidation is necessary to reduce public debt and increase fiscal space in most countries. The authorities will have to exercise expenditure restraint, including a reduction in untargeted oil subsidies.
In the Caribbean, fiscal, external, and financial vulnerabilities remain significant in the tourism-dependent economies. Fiscal consolidation is inevitable but will have to be supported by measures to address chronically weak competitiveness".
Source: IMF Regional Economic Outlook Update for the Western Hemisphere
October 11th,Washington D.C.
