## presentation-en

## Source details

**Canonical URL:** [presentation-en](https://www.imf.org/-/media/files/publications/reo/whd/2023/october/english/presentation-en.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/reo/whd/2023/october/english/presentation-en.pdf.md)
- [Structured JSON version](/-/media/files/publications/reo/whd/2023/october/english/presentation-en.pdf.json)

---

### Recent Developments
- Presentation date and author:
  - SEPTEMBER 29, 2023
  - Rodrigo Valdés, Director
- Growth dynamics:
  - LAC: Real GDP rebounded strongly post-pandemic but is decelerating; index base: (2019 = 100).
  - LA5: Economic Activity Indicator shown with index and components (Total activity, Services, Manufacturing).
  - Rebound from 2021 contraction noted; recent slowdown driven mainly by a weakening in manufacturing.
- External sector and commodities:
  - Contributions to Merchandise Nominal Exports Growth presented as 3-month moving sum; year-over-year percent change.
  - Prices of LAC Key Commodity Exports shown as 3-month moving average; year-over-year percent change for Oil, Copper, Soybeans.
  - The region’s exports have lost momentum in 2023, partly due to weakening commodity prices.
- Financial conditions:
  - LA5: Ten-year Sovereign Bond Yields (Percent); median of LA5 countries (Brazil, Chile, Colombia, Mexico, Peru).
  - Financial conditions have remained tight.
- Labor markets:
  - LA5: Unemployment Rate (Percent) — unemployment has fallen sharply.
  - LA5: Employment index (Left scale: index: 2005 = 100) — employment has returned close to the pre-pandemic trend.
  - LA5: Decomposition of Participation Rate (Percentage points change since 2019) — labor force participation has plateaued at a lower level; contributions noted from demographics (population aging), older workers (55+) leaving labor force, prime age (25–54) leaving, young (15–24) leaving; 2023 (est.) vs Average 2000–19 shown.
- Inflation and prices:
  - LAC: Headline Consumer Price Inflation (Quarterly average; year-over-year percent change) — headline inflation has fallen across the region in line with global trends.
  - LA5 and Peer Groups: Headline Consumer Price Inflation (Year-over-year percent change) — comparisons with EM Asia and EM Europe and the United States shown.
  - Selected LA5 Economies: Core Inflation Distribution (Year-over-year percent change) — core price pressures starting to recede; core goods exclude food, transport, and housing items; core services exclude transport and housing items; interquartile range refers to item-level annual inflation.
  - Selected LA5 Economies: Imported Inflation (Year-over-year percent change) — falling import prices and currency appreciation have helped.
- Monetary policy and credit:
  - LA5 and Peer Economies: Real Monetary Policy Rates (Percent) — ex ante real policy rate reported; real policy rates have risen sharply, including relative to other economies.
  - LA5: Headline Inflation and Monetary Policy Rate (Percentage points) — nominal policy rate deviations from neutral at inflation peak illustrated alongside historical episodes.
  - LA5: Real Credit Growth (Year-over-year percent change) — consumer credit growth is slowing and corporate credit is contracting.
  - Selected LA5 Economies: Credit Conditions Index — index captures loan officers' perceptions of credit supply and demand; increases denote tighter supply / weaker demand.
- Banking sector:
  - LA5: Financial Soundness Indicators (Percent) — CAR, liquidity, NPL, ROA, ROE plotted; banks remain liquid, well capitalized, and profitable.
  - Historical Impact of Monetary Policy Rate Changes on Bank Profitability — effect from one percent increase in policy rate shown for Net interest margin, Provisions (flow)/Loans, Profitability (return on assets) with 90 percent confidence interval and point estimates for BRA, CHL, COL, MEX, PER, USA.
- Fiscal stance:
  - LAC Subregions: General Government Primary Balance (Cumulative changes; percentage points of GDP) — pandemic-related fiscal stimulus has been unwound faster than in other EMs and AEs; aggregates are medians.
  - LAC and Other Economies: General Government Primary Balance (Cumulative changes; percentage points of GDP) — LA5, OTSA, CAPDR, CARIB series shown.

### Outlook and Risks
- Regional projections (WEO data as of September 26, 2023) — aggregates are PPP GDP-weighted averages; inflation aggregates exclude Venezuela.
- Selected projections and levels (year labels include 2021, 2022, 2023, 2024):
  - United States:
    - Growth: 5.9 2.1 2.1 1.5
    - Inflation: 7.4 6.4 3.0 2.6
  - Canada:
    - Growth: 5.0 3.4 1.3 1.6
    - Inflation: 4.7 6.6 2.7 2.1
  - Latin America and the Caribbean (LAC):
    - Growth: 7.3 4.1 2.3 2.3
    - Inflation: 11.5 14.6 13.6 8.8
  - LAC excluding Argentina and Venezuela:
    - Growth: 7.1 4.0 2.8 2.2
    - Inflation: 7.8 7.8 5.0 3.6
  - South America:
    - Growth: 7.5 3.8 1.6 2.0
    - Inflation: 14.1 18.3 19.1 11.9
  - CAPDR:
    - Growth: 11.2 5.4 3.8 3.9
    - Inflation: 5.1 7.3 3.4 3.5
  - Caribbean Tourism Dependent:
    - Growth: 9.1 9.0 3.2 2.3
    - Inflation: 5.2 7.4 4.1 3.5
  - Caribbean Non-Tourism Dependent:
    - Growth: 2.5 17.1 13.6 11.6
    - Inflation: 11.8 20.4 13.0 7.4
  - LA5 (memorandum):
    - Growth: 6.8 3.7 2.6 1.9
    - Inflation: 8.3 7.8 5.1 3.6
  - Brazil:
    - Growth: 5.0 2.9 3.1 1.5
    - Inflation: 10.1 5.8 4.9 3.9
  - Chile:
    - Growth: 11.7 2.4 –0.5 1.6
    - Inflation: 7.1 12.8 4.5 3.0
  - Colombia:
    - Growth: 11.0 7.3 1.4 2.0
    - Inflation: 5.6 13.1 8.8 4.5
  - Mexico:
    - Growth: 5.8 3.9 3.2 2.1
    - Inflation: 7.4 7.8 4.5 3.2
  - Peru:
    - Growth: 13.3 2.7 1.1 2.7
    - Inflation: 6.4 8.5 4.2 2.2
- Subregional outlook highlights:
  - CAPDR: Robust remittances and tourism continue supporting growth; Real remittances to CAPDR indexed to 2019=100 and tourist arrivals to the Caribbean (6-month moving average; right scale) shown; CAPDR Real GDP Levels (Index 2019 = 100) show continued support.
  - CAPDR: Headline and Core Inflation (Year-over-year percent change) — core excludes Panama due to data limitations.
  - Caribbean: Real GDP Levels (Index 2019 = 100) — tourism dependent and commodity exporters series illustrated; moderation in recovery noted.
  - The Caribbean: Contributions to Headline Inflation — decomposition into Global and Idiosyncratic components using Guajardo et al. (2023) methodology; the sharp rise in inflation since 2021 was mostly driven by global factors.
- Risks (balanced but tilted to the downside):
  - Upside scenarios:
    - A more benign global environment
    - Inflation declines faster than anticipated
    - Lower scarring from recent shocks
    - Abundance of “green metals”
  - Downside scenarios:
    - Lower growth in key trading partners
    - Greater commodity price volatility
    - New bouts of global inflationary pressures
    - Renewed financial market turbulence
    - Climate-related shocks
    - Monetary and fiscal policy slippages
    - Increased crime and social tensions

### Climate-related Risks and Impacts
- Climate and El Niño:
  - Impact of El Niño on Output (Percent; cumulative impact; Quarter 6) estimated using local projection method in a cross-country panel with 10th/90th percentile confidence intervals.
- Migration and disasters:
  - Impact of Climate Disasters on Migration (Impact of one-standard deviation in frequency of climate disasters; percent of initial population) — specifications regress identified origin factors of migration outflows on natural disasters using Amiti and Weinstein (2018) method.
- Economic impacts in CAPDR and the Caribbean:
  - Impact of Climate on Economic Outcomes (Percent of total GDP) — depicts impact of natural disasters on agricultural GDP and remittances measured as percent of total GDP for CAPDR and the Caribbean using EM-DAT, UN Population Division, World Bank WDI, and IMF staff calculations.

### Climate and El Niño risks (Section 2)
- Short-run effect:
  - In the short run, El Niño could negatively affect economic activity in some countries.
- Medium-term effect:
  - In the medium-term, climate-related shocks pose risks through the impact on migration, which can lead to reduced agricultural output that could be partially offset by the increase in remittances.
- Estimation notes:
  - Point estimate and 10th/90th confidence intervals are used to report impacts.
  - Regional groupings referenced: CAPDR, Colombia, Ecuador, and Peru; Bolivia, Brazil, Chile, and Mexico; Argentina, Paraguay, and Uruguay; Caribbean; CAPDR; Mexico; South America.

### Monetary policy and inflation (Section 2)
- Policy stance:
  - Absent new shocks, monetary easing is expected to proceed at a gradual pace.
- Rationale:
  - Near-term inflation expectations remain elevated.
  - Most economies are operating above potential.
- Indicators and labels:
  - LA5: Monetary Policy Rate and Inflation (Percentage points; deviation from neutral rate and inflation target).
  - Distribution of Headline Inflation Expectation, 2024 (Deviation from inflation target; percentage points).
  - LA5: Inflation Gap and Output Gap (Percent).
  - LA5 = Brazil, Chile, Colombia, Mexico, Peru.
  - Time series labels include 2021Q1 through 2024Q4 for monetary policy rate and inflation series.
  - Consensus forecasts taken from the August 2023 survey. IMF desk projections from October 2023 WEO.
  - Inflation gap is the deviation of end-of period inflation from the inflation target.

### Public debt and fiscal consolidation (Section 2)
- Public debt outlook:
  - Public debt is high and is expected to remain elevated.
  - General Government Gross Debt reported (Percent of GDP); aggregates are medians.
  - LAC = Latin America and the Caribbean (excl. ARG/VEN); LA5 = BRA, CHL, COL, MEX, PER.
  - CAPDR = Central America, Panama, and the Dominican Republic; CARIB = Caribbean; EM-IG = emerging markets investment grade; Other EMs = emerging markets (excl. LAC/China); OTSA = other South America (Bolivia, Ecuador, Paraguay, Uruguay).
  - Public debt is high relative to peer economies and is projected to decline only gradually (charts reference 2013–2028 series and 2022–2028 comparisons).
- Fiscal balances:
  - Despite ambitious fiscal consolidation plans, general government primary balances are expected to improve somewhat from 2024 on.
  - General Government Primary Balance (Percent of GDP); aggregates are medians.
  - Historical PB (2014–19) and Baseline PB (2023–28) are shown for country and subregion groupings.

### Growth outlook and structural reforms
- Medium-term growth:
  - While pandemic scarring has been smaller than originally expected, growth prospects remain subdued and income convergence elusive.
  - LAC: Real GDP by WEO Vintage and Real Gross Domestic Product per Capita shown (logs; thousands of PPP 2017 international dollars).
  - Shaded areas (1980–94, 2015–24) refer to Latin America and the Caribbean's lost decades.
  - LAC is a purchasing-power-parity GDP-weighted average.
- Policy implication:
  - Subdued medium-term growth prospects call for structural reforms to boost productivity and convergence.

### Key structural impediments and reform priorities
- Long-standing structural challenges:
  - Lackluster productivity and low investment.
  - Low international trade, including intraregional trade.
  - Labor market rigidities and high informality.
  - High poverty and inequality.
- New challenges:
  - Climate change.
  - Impact of new digital technologies.

### Trade, infrastructure, and investment
- Trade openness:
  - LAC’s trade openness lags that of peer regions (Total trade of goods and services; percent of GDP).
- Infrastructure catch-up scenarios (output gains reported as percent increase in output relative to baseline):
  - 10 percent catch-up scenario.
  - 20 percent catch-up scenario.
  - 50 percent catch-up scenario.
- Policy implication:
  - Closing infrastructure gaps would boost trade and growth.

### Security and crime
- Crime indicators:
  - Crime across Regions/Countries illustrated (Homicide rate per 100,000 people; 2017–19 average).
- Economic impact:
  - Crime and insecurity have become widespread in LAC and are detrimental to growth.
  - Gains from closing the region’s security gaps are estimated as percentage points of GDP growth for 20%, 50% and 100% reductions in the gap relative to the world average.

### Energy transition, technology adoption, and education
- Energy transition:
  - The energy transition is an opportunity for some countries: Reserves of selected critical metals shown as Percent of GDP (Graphite, Lithium, Manganese, Nickel, Copper).
  - For Mexico, manganese export prices of Brazil are used due to lack of data.
- Technology and education:
  - Adopting new technologies requires high quality education:
    - Digital Adoption Index (2016) versus Learning-adjusted years of school (2018) plotted for CAPDR, CARIB, SA and MEX, and comparison groups (Advanced, Emerging markets).
    - Digital adoption index values range (0 to 1.0) and learning-adjusted years of school axis from 0 to 15.

### Social cohesion and income volatility
- Inequality and volatility:
  - Inequality has fallen, but remains high relative to other regions (Gini Index; population-weighted averages across regions and years 2005, 2010, 2015, 2020 or latest).
  - Aggregate income volatility has fallen—in part due to better policies:
    - Total variance, domestic component, external component reported for pre-2000 and post 2000.
- Individual income volatility and social transfers:
  - Fraction of each group with large income losses (Percent). Large income changes are defined as changes in real income greater than 25 percent in absolute value.
  - Groups shown: Male, Older, Less educated, Informal, Poor, Receiving social transfers; values reported before and after social transfers.
  - Values are purchasing-power-parity GDP-weighted averages of Argentina, Brazil, Chile, and Peru.
- Policy implication:
  - Individual income volatility is high and generally not mitigated by social transfers for those in the labor force.

### Main messages and policy priorities
- Macro and near-term:
  - After a strong rebound from the pandemic, LAC’s growth is slowing.
  - The slowdown reflects tighter policies to contain inflation and weakening external conditions.
  - Inflation is easing and projected to converge gradually to central banks’ targets.
  - Monetary easing should proceed, mindful of risks.
  - Fiscal consolidation plans are ambitious—as needed and in line with Fund advice.
- Structural and social priorities to boost growth and inclusion:
  - Boosting trade, including intra-regional.
  - Strengthening domestic security.
  - Developing frameworks to foster investment in green minerals.
  - Enhancing the quality of education.
  - Strengthening social protection mechanisms.

*IMF | Western Hemisphere Department - Regional Economic Outlook (presentation-en)*

### Section 1

### Securing Low Inflation and Nurturing Potential Growth

### Recent Developments
- Presentation date and author:
  - SEPTEMBER 29, 2023
  - Rodrigo Valdés, Director
- Growth dynamics:
  - LAC: Real GDP rebounded strongly post-pandemic but is decelerating; index base: (2019 = 100).
  - LA5: Economic Activity Indicator shown with index and components (Total activity, Services, Manufacturing).
  - Rebound from 2021 contraction noted; recent slowdown driven mainly by a weakening in manufacturing.
- External sector and commodities:
  - Contributions to Merchandise Nominal Exports Growth presented as 3-month moving sum; year-over-year percent change.
  - Prices of LAC Key Commodity Exports shown as 3-month moving average; year-over-year percent change for Oil, Copper, Soybeans.
  - The region’s exports have lost momentum in 2023, partly due to weakening commodity prices.
- Financial conditions:
  - LA5: Ten-year Sovereign Bond Yields (Percent); median of LA5 countries (Brazil, Chile, Colombia, Mexico, Peru).
  - Financial conditions have remained tight.
- Labor markets:
  - LA5: Unemployment Rate (Percent) — unemployment has fallen sharply.
  - LA5: Employment index (Left scale: index: 2005 = 100) — employment has returned close to the pre-pandemic trend.
  - LA5: Decomposition of Participation Rate (Percentage points change since 2019) — labor force participation has plateaued at a lower level; contributions noted from demographics (population aging), older workers (55+) leaving labor force, prime age (25–54) leaving, young (15–24) leaving; 2023 (est.) vs Average 2000–19 shown.
- Inflation and prices:
  - LAC: Headline Consumer Price Inflation (Quarterly average; year-over-year percent change) — headline inflation has fallen across the region in line with global trends.
  - LA5 and Peer Groups: Headline Consumer Price Inflation (Year-over-year percent change) — comparisons with EM Asia and EM Europe and the United States shown.
  - Selected LA5 Economies: Core Inflation Distribution (Year-over-year percent change) — core price pressures starting to recede; core goods exclude food, transport, and housing items; core services exclude transport and housing items; interquartile range refers to item-level annual inflation.
  - Selected LA5 Economies: Imported Inflation (Year-over-year percent change) — falling import prices and currency appreciation have helped.
- Monetary policy and credit:
  - LA5 and Peer Economies: Real Monetary Policy Rates (Percent) — ex ante real policy rate reported; real policy rates have risen sharply, including relative to other economies.
  - LA5: Headline Inflation and Monetary Policy Rate (Percentage points) — nominal policy rate deviations from neutral at inflation peak illustrated alongside historical episodes.
  - LA5: Real Credit Growth (Year-over-year percent change) — consumer credit growth is slowing and corporate credit is contracting.
  - Selected LA5 Economies: Credit Conditions Index — index captures loan officers' perceptions of credit supply and demand; increases denote tighter supply / weaker demand.
- Banking sector:
  - LA5: Financial Soundness Indicators (Percent) — CAR, liquidity, NPL, ROA, ROE plotted; banks remain liquid, well capitalized, and profitable.
  - Historical Impact of Monetary Policy Rate Changes on Bank Profitability — effect from one percent increase in policy rate shown for Net interest margin, Provisions (flow)/Loans, Profitability (return on assets) with 90 percent confidence interval and point estimates for BRA, CHL, COL, MEX, PER, USA.
- Fiscal stance:
  - LAC Subregions: General Government Primary Balance (Cumulative changes; percentage points of GDP) — pandemic-related fiscal stimulus has been unwound faster than in other EMs and AEs; aggregates are medians.
  - LAC and Other Economies: General Government Primary Balance (Cumulative changes; percentage points of GDP) — LA5, OTSA, CAPDR, CARIB series shown.

### Outlook and Risks
- Regional projections and table highlights (WEO data as of September 26, 2023):
  - Western Hemisphere: Real GDP Growth and Inflation (Year-over-year percent change); aggregates are PPP GDP-weighted averages. For growth, green/red denotes upward/downward revision compared with the April 2023 WEO forecasts. For inflation, red/green denotes upward/downward revision compared with the April 2023 WEO forecasts. All inflation aggregates exclude Venezuela.
  - Selected projections and levels as presented (year labels include 2021, 2022, 2023, 2024):
    - United States: 5.9 2.1 2.1 1.5 (growth row); 7.4 6.4 3.0 2.6 (inflation row)
    - Canada: 5.0 3.4 1.3 1.6 (growth); 4.7 6.6 2.7 2.1 (inflation)
    - Latin America and the Caribbean (LAC): 7.3 4.1 2.3 2.3 (growth); 11.5 14.6 13.6 8.8 (inflation)
    - LAC excluding Argentina and Venezuela: 7.1 4.0 2.8 2.2 (growth); 7.8 7.8 5.0 3.6 (inflation)
    - South America: 7.5 3.8 1.6 2.0 (growth); 14.1 18.3 19.1 11.9 (inflation)
    - CAPDR: 11.2 5.4 3.8 3.9 (growth); 5.1 7.3 3.4 3.5 (inflation)
    - Caribbean Tourism Dependent: 9.1 9.0 3.2 2.3 (growth); 5.2 7.4 4.1 3.5 (inflation)
    - Caribbean Non-Tourism Dependent: 2.5 17.1 13.6 11.6 (growth); 11.8 20.4 13.0 7.4 (inflation)
    - LA5 (memorandum): 6.8 3.7 2.6 1.9 (growth); 8.3 7.8 5.1 3.6 (inflation)
    - Brazil: 5.0 2.9 3.1 1.5 (growth); 10.1 5.8 4.9 3.9 (inflation)
    - Chile: 11.7 2.4 –0.5 1.6 (growth); 7.1 12.8 4.5 3.0 (inflation)
    - Colombia: 11.0 7.3 1.4 2.0 (growth); 5.6 13.1 8.8 4.5 (inflation)
    - Mexico: 5.8 3.9 3.2 2.1 (growth); 7.4 7.8 4.5 3.2 (inflation)
    - Peru: 13.3 2.7 1.1 2.7 (growth); 6.4 8.5 4.2 2.2 (inflation)
- Subregional outlook highlights:
  - CAPDR: Robust remittances and tourism continue supporting growth; Real remittances to CAPDR indexed to 2019=100 and tourist arrivals to the Caribbean (6-month moving average; right scale) shown; CAPDR Real GDP Levels (Index 2019 = 100) show continued support.
  - CAPDR: Headline and Core Inflation (Year-over-year percent change) — headline and core inflation series plotted; core excludes Panama due to data limitations.
  - Caribbean: Real GDP Levels (Index 2019 = 100) — tourism dependent and commodity exporters series illustrated; moderation in recovery noted.
  - The Caribbean: Contributions to Headline Inflation — decomposition into Global and Idiosyncratic components using Guajardo et al. (2023) methodology; the sharp rise in inflation since 2021 was mostly driven by global factors.
- Risks (balanced but tilted to the downside) — listed risk scenarios:
  - Upside scenarios:
    - A more benign global environment
    - Inflation declines faster than anticipated
    - Lower scarring from recent shocks
    - Abundance of “green metals”
  - Downside scenarios:
    - Lower growth in key trading partners
    - Greater commodity price volatility
    - New bouts of global inflationary pressures
    - Renewed financial market turbulence
    - Climate-related shocks
    - Monetary and fiscal policy slippages
    - Increased crime and social tensions

### Climate-related Risks and Impacts
- Climate and El Niño:
  - Impact of El Niño on Output (Percent; cumulative impact; Quarter 6) estimated using local projection method in a cross-country panel with 10th/90th percentile confidence intervals.
- Migration and disasters:
  - Impact of Climate Disasters on Migration (Impact of one-standard deviation in frequency of climate disasters; percent of initial population) — specifications regress identified origin factors of migration outflows on natural disasters using Amiti and Weinstein (2018) method.
- Economic impacts in CAPDR and the Caribbean:
  - Impact of Climate on Economic Outcomes (Percent of total GDP) — depicts impact of natural disasters on agricultural GDP and remittances measured as percent of total GDP for CAPDR and the Caribbean using EM-DAT, UN Population Division, World Bank WDI, and IMF staff calculations.

*IMF | Western Hemisphere Department - Regional Economic Outlook (presentation-en - Section 1)*

### Section 2

### presentation-en - Section 2

### Climate and El Niño risks
- In the short run, El Niño could negatively affect economic activity in some countries.
- In the medium-term, climate-related shocks pose risks through the impact on migration, which can lead to reduced agricultural output that could be partially offset by the increase in remittances.
- Figure annotations and statistical notes:
  - Point estimate and 10th/90th confidence intervals are used to report impacts.
  - Regional groupings referenced: CAPDR, Colombia, Ecuador, and Peru; Bolivia, Brazil, Chile, and Mexico; Argentina, Paraguay, and Uruguay; Caribbean; CAPDR; Mexico; South America.

### Monetary policy and inflation
- Absent new shocks, monetary easing is expected to proceed at a gradual pace.
- Rationale:
  - Near-term inflation expectations remain elevated.
  - Most economies are operating above potential.
- Indicators and labels shown:
  - LA5: Monetary Policy Rate and Inflation (Percentage points; deviation from neutral rate and inflation target).
  - Distribution of Headline Inflation Expectation, 2024 (Deviation from inflation target; percentage points).
  - LA5: Inflation Gap and Output Gap (Percent).
  - LA5 = Brazil, Chile, Colombia, Mexico, Peru.
  - Time series labels include 2021Q1 through 2024Q4 for monetary policy rate and inflation series.
  - Consensus forecasts taken from the August 2023 survey. IMF desk projections from October 2023 WEO.
  - Inflation gap is the deviation of end-of period inflation from the inflation target.

### Public debt and fiscal consolidation
- Public debt is high and is expected to remain elevated.
- General Government Gross Debt is reported (Percent of GDP); aggregates are medians.
  - LAC = Latin America and the Caribbean (excl. ARG/VEN); LA5 = BRA, CHL, COL, MEX, PER.
  - CAPDR = Central America, Panama, and the Dominican Republic; CARIB = Caribbean; EM-IG = emerging markets investment grade; Other EMs = emerging markets (excl. LAC/China); OTSA = other South America (Bolivia, Ecuador, Paraguay, Uruguay).
- Public debt is high relative to peer economies and is projected to decline only gradually (charts reference 2013–2028 series and 2022–2028 comparisons).
- Despite ambitious fiscal consolidation plans, general government primary balances are expected to improve somewhat from 2024 on.
  - General Government Primary Balance (Percent of GDP); aggregates are medians.
  - Historical PB (2014–19) and Baseline PB (2023–28) are shown for country and subregion groupings.

### Growth outlook and structural reforms
- While pandemic scarring has been smaller than originally expected, growth prospects remain subdued and income convergence elusive.
- LAC: Real GDP by WEO Vintage and Real Gross Domestic Product per Capita shown (logs; thousands of PPP 2017 international dollars).
  - Shaded areas (1980–94, 2015–24) refer to Latin America and the Caribbean's lost decades.
  - LAC is a purchasing-power-parity GDP-weighted average.
- Subdued medium-term growth prospects call for structural reforms to boost productivity and convergence.

### Key structural impediments and reform priorities
- Long-standing structural challenges:
  - Lackluster productivity and low investment.
  - Low international trade, including intraregional trade.
  - Labor market rigidities and high informality.
  - High poverty and inequality.
- New challenges:
  - Climate change.
  - Impact of new digital technologies.

### Trade, infrastructure, and investment
- LAC’s trade openness lags that of peer regions (Total trade of goods and services; percent of GDP).
- Closing infrastructure gaps would boost trade and growth:
  - Output gains from closing infrastructure gap reported as percent increase in output relative to baseline.
  - Scenarios shown for 10 percent catch-up, 20 percent catch-up, 50 percent catch-up.

### Security and crime
- Crime across Regions/Countries is illustrated (Homicide rate per 100,000 people; 2017–19 average).
- Crime and insecurity have become widespread in LAC and are detrimental to growth.
- Gains from closing the region’s security gaps are estimated as percentage points of GDP growth for 20%, 50% and 100% reductions in the gap relative to the world average.

### Energy transition, technology adoption, and education
- The energy transition is an opportunity for some countries:
  - Reserves of selected critical metals shown as Percent of GDP (Graphite, Lithium, Manganese, Nickel, Copper).
  - For Mexico, manganese export prices of Brazil are used due to lack of data.
- Adopting new technologies requires high quality education:
  - Digital Adoption Index (2016) versus Learning-adjusted years of school (2018) plotted for CAPDR, CARIB, SA and MEX, and comparison groups (Advanced, Emerging markets).
  - Digital adoption index values range (0 to 1.0) and learning-adjusted years of school axis from 0 to 15.

### Social cohesion and income volatility
- Inequality has fallen, but remains high relative to other regions (Gini Index; population-weighted averages across regions and years 2005, 2010, 2015, 2020 or latest).
- Aggregate income volatility has fallen—in part due to better policies:
  - Total variance, domestic component, external component reported for pre-2000 and post 2000.
- Individual income volatility is high and generally not mitigated by social transfers for those in the labor force:
  - Fraction of each group with large income losses (Percent). Large income changes are defined as changes in real income greater than 25 percent in absolute value.
  - Groups shown: Male, Older, Less educated, Informal, Poor, Receiving social transfers; values reported before and after social transfers.
  - Values are purchasing-power-parity GDP-weighted averages of Argentina, Brazil, Chile, and Peru.

### Main messages and policy priorities
- Macro and near-term:
  - After a strong rebound from the pandemic, LAC’s growth is slowing.
  - The slowdown reflects tighter policies to contain inflation and weakening external conditions.
  - Inflation is easing and projected to converge gradually to central banks’ targets.
  - Monetary easing should proceed, mindful of risks.
  - Fiscal consolidation plans are ambitious—as needed and in line with Fund advice.
- Structural and social priorities to boost growth and inclusion:
  - Boosting trade, including intra-regional.
  - Strengthening domestic security.
  - Developing frameworks to foster investment in green minerals.
  - Enhancing the quality of education.
  - Strengthening social protection mechanisms.

*IMF | Western Hemisphere Department - Regional Economic Outlook*

---


_Source: https://www.imf.org/-/media/files/publications/reo/whd/2023/october/english/presentation-en.pdf_