## whd-executive-board-meeting-october-2025-webpage-eng

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### Navigating a Shifting Global Environment — Recent Developments
- Trade and integration
  - Goods Exports by Destination (Average 2018–24): Trade exposure to the US is limited in most LAC economies.
  - Forward and Backward GVC Participation (Average 2015–18; percent of gross exports): Exports are generally used less as inputs in other countries’ exports relative to peers.
  - Statutory Tariff Rates and Share of US Exports (Percent): Tariff rates in LAC are low relative to other emerging market and advanced economies. (LA8 excludes Mexico. LAC share of US exports to world excludes Mexico.)
- Commodity and financial conditions
  - Commodity Prices (Index: January 1, 2025 = 100): After a short-lived bout of volatility, commodity prices have remained broadly stable (series shown for Oil, Copper, Iron ore, Soybeans, Coffee).
  - US Dollar Index and LA7 EMBIG Sovereign Spread (Index: January 1, 2025 = 100): Financial conditions have eased (US dollar index and LA7 EMBIG shown; LA7 = Brazil, Chile, Colombia, Mexico, Paraguay, Peru, Uruguay).
- Output and trade contributions
  - LA7: Contributions to Real GDP Growth (Year-over-year percent change): Economic activity remained relatively stable during the first half of 2025; exports’ contribution to growth increased reflecting a pickup in export volumes early in the year.
  - Exports Growth (Year-over-year percent change): LA7 real exports and LA8 real exports rose in line with world trade volume.
- Labor markets and credit
  - Unemployment Rate (Percent): Labor markets have remained strong, with unemployment rates around historical lows in many countries (presentation shows country series and percentiles).
  - Real Credit Growth (Year-over-year percent change): Private sector credit has continued to grow, albeit with some moderation in corporate credit. (Aggregates include Brazil, Chile, Colombia, Mexico, and Peru.)
- Inflation and monetary policy
  - Headline Consumer Price Inflation (Deviation from inflation target; percentage points): Inflation is hovering around targets in some countries, although convergence slowed notably in others.
  - LA7: Core Goods and Core Services Inflation (Year-over-year percent change): Core goods and core services inflation has edged up.
  - Monetary Policy Rates (Nominal; percent): Monetary policy has appropriately responded to inflation developments.
  - LA7: Distribution of Two-Year Ahead Inflation Expectations by Forecasters (Percentage points; deviation from target): Inflation expectations have been stable but remain above targets.
- Fiscal positions
  - LA7: General Government Structural Primary Balance (Percent of potential GDP): Fiscal consolidation efforts have been delayed and are insufficient to stabilize debt.
  - LA7: Debt-Stabilizing Primary Balance, Gross Public Debt, and Nominal Interest Rate: Charts indicate debt-stabilizing primary balances and sensitivity to nominal interest rates; example annotation: "Debt = 56" accompanied by primary balance scale from -3.5 to 0.5 percent of GDP and timeline 2021–2030 comparing October 2025 WEO, October 2024 WEO, October 2023 WEO.

### Outlook and Risks
- Growth projections (PPP GDP-weighted averages; Year-over-year percent change)
  - 2024:
    - Latin America and the Caribbean 2.4
    - Latin America 8 (LA8) 2.1
    - Latin America 7 (LA7) 2.6
    - CAPDR 3.9
    - Caribbean: Tourism dependent 2.1
    - Caribbean: Non-tourism dependent 7.3
  - 2025:
    - Latin America and the Caribbean 2.4
    - LA8 2.3
    - LA7 2.0
    - CAPDR 3.4
    - Caribbean: Tourism dependent 2.3
    - Caribbean: Non-tourism dependent 4.2
  - 2026:
    - Latin America and the Caribbean 2.3
    - LA8 2.2
    - LA7 1.9
    - CAPDR 3.8
    - Caribbean: Tourism dependent 2.0
    - Caribbean: Non-tourism dependent 1.2
- Inflation outlook (End-of-period Inflation; Year-over-year percent change)
  - 2024:
    - Latin America and the Caribbean 12.2
    - LA8 13.7
    - LA7 4.5
    - CAPDR 1.8
    - Caribbean: Tourism dependent 2.7
    - Caribbean: Non-tourism dependent 7.9
  - 2025:
    - Latin America and the Caribbean 6.5
    - LA8 6.8
    - LA7 4.2
    - CAPDR 2.2
    - Caribbean: Tourism dependent 2.8
    - Caribbean: Non-tourism dependent 9.0
  - 2026:
    - Latin America and the Caribbean 4.2
    - LA8 4.1
    - LA7 3.3
    - CAPDR 3.3
    - Caribbean: Tourism dependent 3.0
    - Caribbean: Non-tourism dependent 7.6
- Risk assessments
  - Risks to Growth (Percent share of total number of LAC countries): Risks to near-term growth are tilted to the downside (charts compare LAC, LA8, CAPDR, CARIB and categories Tilted to the upside / Tilted to the downside / Balanced).
  - Risks to Inflation (Percent share of total number of LAC countries): Risks to inflation are generally more balanced (same regional breakdown as for growth).
- Regional specifics
  - Caribbean: Stayover and Cruise Arrivals (Percent of 2019 levels): Tourist arrivals have remained above pre-pandemic levels.
  - Caribbean: Monthly Import Volumes (Thousands of metric tons): Import volumes are comparable to 2024 levels, suggesting limited impact so far from global trade policies.
  - Caribbean: Real GDP Growth (Year-over-year percent change): Growth is holding up but expected to soften in 2026 (tourism-dependent vs. commodity exporters excluding Guyana shown).
  - CAPDR: New migration and trade policies
    - Real GDP growth (Year-over-year percent change): Growth slowed in 2024 and is projected to ease in 2025–26.
    - Remittances to CAPDR* and US Hispanic Unemployment Rate (SA) (US$ billions and as percent of labor force): Remittance growth accelerated in H1-2025 despite stable unemployment. (CAPDR* includes Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua; for Nicaragua, May data estimated; remittances data for June to August 2025 excludes Nicaragua.)
    - Overlap with Mexico of Exports to US (Percent of total goods exports): Heavy reliance on the US market and substantial overlap with Mexico’s export basket pose risks (chart shows exports overlapping with Mexico's covered by USMCA vs. exports not overlapping).

### In Focus: Macroeconomic Impact of Uncertainty, Monetary‑Fiscal Interactions, Resource Allocation and Productivity
- Macroeconomic impact of uncertainty
  - Effect of Uncertainty on Real GDP by Domestic Vulnerabilities, Two Years After Shock: Uncertainty has a delayed yet negative effect on growth in the region. The impact of uncertainty is more contained with stronger institutions and lower debt.
  - Response of Real GDP Growth to a One-Standard-Deviation Increase in Uncertainty (Percent): Point estimates and 90 percent confidence intervals indicate negative responses over years 0–4.
- Monetary-fiscal policy interactions
  - Reforms enhancing central bank independence were pivotal for price stability:
    - LA5: Seigniorage and CB Claims on Government (Percent): Central bank financing of the government significantly declined; seigniorage and CB claims on government depicted from 1980–2024 for LA5 (Brazil, Chile, Colombia, Mexico, Peru).
    - Index of Inflation Expectations Anchoring (Index): Inflation expectations became better anchored for LA5 relative to advanced economies (series 1997–2024).
  - Fiscal policy can hinder monetary policy effectiveness:
    - Response to a 100-Basis-Point Monetary Policy Tightening Shock at 18 Month Horizon (Percent): Local projection results show changes in inflation, inflation expectations, and LT yields at the 18-month horizon.
    - Impact of Fiscal Deficit Shocks: Headline Inflation (Percent): High debt is modeled as an interaction measured whether debt is higher than the 80th percentile; plots depict the response to a 100-basis point shock, indicating fiscal deficits can amplify inflation responses and reduce monetary policy effectiveness.

### Fiscal-monetary interactions and macro implications (Section 2 synthesis)
- Key empirical points
  - High levels of public debt can hinder the impact of monetary policy on key variables.
  - Fiscal shocks can push inflation and inflation expectations up.
  - Adequate fiscal stances would support monetary policy implementation.
  - Note: LA7 is simple average. LA7 = Brazil, Chile, Colombia, Mexico, Paraguay, Peru, Uruguay; MP = monetary policy.
- Empirical methodology
  - Change in the level of each variable at 1- and 2-year horizons is computed from World Economic Outlook forecast errors.
  - Variables affected include: Inflation; Inflation expectations; Exchange rate; Long-term yields.
  - Scenarios considered: Contractionary (Con) and expansionary (Exp) fiscal and monetary policy combinations.

### Productivity levels, misallocation, and firm dynamics
- Productivity levels and gaps
  - Low TFP levels in Latin America are documented relative to the United States (USA=1).
  - 43 percent TFP gap with AE (advanced economies).
  - Aggregates are purchasing-power-parity GDP-weighted averages.
  - Advanced economies = DEU, FRA, ESP; Emerging Asia = MYS, THA, VNM; Emerging Europe = SVN, SVK, LVA, LTU, ROU; Latin America = BRA, COL, MEX.
- Misallocation and firm-level frictions
  - TFP losses from misallocation are attributed to frictions that constrain more productive firms from expanding.
  - Regression approach: Hsieh and Klenow (2009) measure of frictions regressed on firm-level productivity, controlling for year-country-four-digit industry fixed effects; standard errors clustered at the industry and country level.
  - Observations are weighed to match the size distribution in the World Business Environment Survey.
- Firm dynamics and contributions to TFP growth
  - Low TFP growth in Latin America is largely explained by surviving firms, which show weak firm-level productivity growth.
  - Decomposition follows Melitz and Polanec’s (2015) methodology; aggregates are purchasing-power-parity GDP-weighted averages.
  - Regional groupings use 2005 World Economic Outlook classification. Advanced economies = DEU, FRA, ESP; Emerging Asia = MYS, THA, VNM; Emerging Europe = SVN, SVK, LVA, LTU, ROU; Latin America = BRA, COL, MEX.
- Frictions constraining productivity: taxes, credit, and market structure
  - Size-based tax policies offer incentives to remain small.
    - Simplified regimes included:
      - BRA = Microempreendedor Individual (MEI), Simples Nacional (SIMPLES)
      - CHL = Régimen Tributario enfocado a pequeños y medianos contribuyentes (Pro-Pyme)
      - COL = Régimen Simple de Tributación (RST)
      - MEX = Régimen simplificado de confianza (RESICO), Régimen de Incorporación Fiscal (RIF)
      - PER = Régimen Especial de Renta (RER), Régimen MYPE Tributario (RMT)
    - For BRA - SIMPLES, COL - RST, and MEX - RESICO, the median statutory CIT within each STR schedule by revenue bracket and/or sector is used. For MEX- RIF, the year-1 schedule is used. For PER-RER, there is no annual CIT, but a statutory monthly revenue-based quota of 1.5 percent.
    - CIT = corporate income tax; STR = simplified tax regime.
  - Total Credit to Non-financial Sector, 2022-24 (Percent of GDP; quarterly average) indicates credit constraints can limit firm growth.
  - Market dominance of surviving firms reduces pressure to grow and deters entry; TFP and perceptions of openness to competition shown where Y-axis: USA=1.

### Data sources and methodology notes
- Key data and methodological sources cited:
  - Calderon, Dhungana, and Wales (forthcoming); Consensus Economics; Haver Analytics; IMF, World Economic Outlook database; IMF staff calculations; Penn World Table 10.01; Orbis; World Bank Enterprise Surveys; Bank for International Settlements; Dabla-Norris and others (2018); World Economic Forum; national authorities.
- Notes emphasize weighting schemes, country group definitions, and caveats about perception-based indicators in the Global Competitiveness Index 4.0.

### Main messages and policy recommendations
- Macro and near-term messages
  - Growth in LAC remained stable during the first half of 2025, while the disinflation process slowed in some countries.
  - The region is projected to decelerate slightly in 2026, with risks tilted to the downside, and inflation convergence toward targets will likely take longer than previously envisaged in a few countries.
- Monetary policy recommendations
  - Monetary policy should remain vigilant of global trade developments and financial conditions, inflation expectations, and fiscal policy stances.
  - It should continue to rely on strong policy frameworks, including central bank independence.
- Fiscal policy recommendations
  - Fiscal consolidation is critical for rebuilding buffers, stabilizing debt, and supporting inflation convergence, and cannot be further delayed.
  - Adequate fiscal stances would support monetary policy implementation.
- Structural and institutional reforms
  - Advancing structural reforms will be crucial to address lackluster productivity growth associated with persistent resource misallocation.
  - Strong institutions and low public debt can help mitigate the impact of high uncertainty on growth.

*IMF | Western Hemisphere Department - Regional Economic Outlook — whd-executive-board-meeting-october-2025-webpage-eng - Section 2*

### Section 1

### Navigating a Shifting Global Environment

### Recent Developments
- Trade and integration
  - Goods Exports by Destination (Average 2018–24): Trade exposure to the US is limited in most LAC economies.
  - Forward and Backward GVC Participation (Average 2015–18; percent of gross exports): Exports are generally used less as inputs in other countries’ exports relative to peers.
  - Statutory Tariff Rates and Share of US Exports (Percent): Tariff rates in LAC are low relative to other emerging market and advanced economies. (LA8 excludes Mexico. LAC share of US exports to world excludes Mexico.)
- Commodity and financial conditions
  - Commodity Prices (Index: January 1, 2025 = 100): After a short-lived bout of volatility, commodity prices have remained broadly stable (series shown for Oil, Copper, Iron ore, Soybeans, Coffee).
  - US Dollar Index and LA7 EMBIG Sovereign Spread (Index: January 1, 2025 = 100): Financial conditions have eased (US dollar index and LA7 EMBIG shown; LA7 = Brazil, Chile, Colombia, Mexico, Paraguay, Peru, Uruguay).
- Output and trade contributions
  - LA7: Contributions to Real GDP Growth (Year-over-year percent change): Economic activity remained relatively stable during the first half of 2025; exports’ contribution to growth increased reflecting a pickup in export volumes early in the year.
  - Exports Growth (Year-over-year percent change): LA7 real exports and LA8 real exports rose in line with world trade volume.
- Labor markets and credit
  - Unemployment Rate (Percent): Labor markets have remained strong, with unemployment rates around historical lows in many countries (presentation shows country series and percentiles).
  - Real Credit Growth (Year-over-year percent change): Private sector credit has continued to grow, albeit with some moderation in corporate credit. (Aggregates include Brazil, Chile, Colombia, Mexico, and Peru.)
- Inflation and monetary policy
  - Headline Consumer Price Inflation (Deviation from inflation target; percentage points): Inflation is hovering around targets in some countries, although convergence slowed notably in others.
  - LA7: Core Goods and Core Services Inflation (Year-over-year percent change): Core goods and core services inflation has edged up.
  - Monetary Policy Rates (Nominal; percent): Monetary policy has appropriately responded to inflation developments.
  - LA7: Distribution of Two-Year Ahead Inflation Expectations by Forecasters (Percentage points; deviation from target): Inflation expectations have been stable but remain above targets.
- Fiscal positions
  - LA7: General Government Structural Primary Balance (Percent of potential GDP): Fiscal consolidation efforts have been delayed and are insufficient to stabilize debt.
  - LA7: Debt-Stabilizing Primary Balance, Gross Public Debt, and Nominal Interest Rate: Charts indicate debt-stabilizing primary balances and sensitivity to nominal interest rates; example annotation: "Debt = 56" accompanied by primary balance scale from -3.5 to 0.5 percent of GDP and timeline 2021–2030 comparing October 2025 WEO, October 2024 WEO, October 2023 WEO.

### Outlook and Risks
- Growth projections
  - Latin America and the Caribbean: Real GDP Growth (Year-over-year percent change; PPP GDP-weighted averages): Growth in LAC will lose momentum in 2026. Reported figures (selected entries):
    - 2024: Latin America and the Caribbean 2.4; Latin America 8 (LA8) 2.1; Latin America 7 (LA7) 2.6; CAPDR 3.9; Caribbean: Tourism dependent 2.1; Caribbean: Non-tourism dependent 7.3. Difference from October 2024 shown for each group.
    - 2025: Latin America and the Caribbean 2.4; LA8 2.3; LA7 2.0; CAPDR 3.4; Caribbean: Tourism dependent 2.3; Caribbean: Non-tourism dependent 4.2. Difference from October 2024 shown.
    - 2026: Latin America and the Caribbean 2.3; LA8 2.2; LA7 1.9; CAPDR 3.8; Caribbean: Tourism dependent 2.0; Caribbean: Non-tourism dependent 1.2. Difference from October 2024 shown.
- Inflation outlook
  - Latin America and the Caribbean: End-of-period Inflation (Year-over-year percent change): Gradual disinflation expected. Reported figures (selected entries):
    - 2024: Latin America and the Caribbean 12.2; LA8 13.7; LA7 4.5; CAPDR 1.8; Caribbean: Tourism dependent 2.7; Caribbean: Non-tourism dependent 7.9. Difference from October 2024 shown.
    - 2025: Latin America and the Caribbean 6.5; LA8 6.8; LA7 4.2; CAPDR 2.2; Caribbean: Tourism dependent 2.8; Caribbean: Non-tourism dependent 9.0. Difference from October 2024 shown.
    - 2026: Latin America and the Caribbean 4.2; LA8 4.1; LA7 3.3; CAPDR 3.3; Caribbean: Tourism dependent 3.0; Caribbean: Non-tourism dependent 7.6. Difference from October 2024 shown.
- Risk assessments
  - Risks to Growth (Percent share of total number of LAC countries): Risks to near-term growth are tilted to the downside (charts compare LAC, LA8, CAPDR, CARIB and categories Tilted to the upside / Tilted to the downside / Balanced).
  - Risks to Inflation (Percent share of total number of LAC countries): Risks to inflation are generally more balanced (same regional breakdown as for growth).
- Regional specifics
  - Caribbean: Stayover and Cruise Arrivals (Percent of 2019 levels): Tourist arrivals have remained above pre-pandemic levels.
  - Caribbean: Monthly Import Volumes (Thousands of metric tons): Import volumes are comparable to 2024 levels, suggesting limited impact so far from global trade policies.
  - Caribbean: Real GDP Growth (Year-over-year percent change): Growth is holding up but expected to soften in 2026 (tourism-dependent vs. commodity exporters excluding Guyana shown).
  - CAPDR: New migration and trade policies
    - Real GDP growth (Year-over-year percent change): Growth slowed in 2024 and is projected to ease in 2025–26.
    - Remittances to CAPDR* and US Hispanic Unemployment Rate (SA) (US$ billions and as percent of labor force): Remittance growth accelerated in H1-2025 despite stable unemployment. (CAPDR* includes Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua; for Nicaragua, May data estimated; remittances data for June to August 2025 excludes Nicaragua.)
    - Overlap with Mexico of Exports to US (Percent of total goods exports): Heavy reliance on the US market and substantial overlap with Mexico’s export basket pose risks (chart shows exports overlapping with Mexico's covered by USMCA vs. exports not overlapping).

### In Focus: Macroeconomic Impact of Uncertainty, Monetary‑Fiscal Interactions, Resource Allocation and Productivity
- Macroeconomic impact of uncertainty
  - Effect of Uncertainty on Real GDP by Domestic Vulnerabilities, Two Years After Shock: Uncertainty has a delayed yet negative effect on growth in the region. The impact of uncertainty is more contained with stronger institutions and lower debt.
  - Response of Real GDP Growth to a One-Standard-Deviation Increase in Uncertainty (Percent): Point estimates and 90 percent confidence intervals indicate negative responses over years 0–4.
- Monetary-fiscal policy interactions
  - Reforms enhancing central bank independence were pivotal for price stability:
    - LA5: Seigniorage and CB Claims on Government (Percent): Central bank financing of the government significantly declined; seigniorage and CB claims on government depicted from 1980–2024 for LA5 (Brazil, Chile, Colombia, Mexico, Peru).
    - Index of Inflation Expectations Anchoring (Index): Inflation expectations became better anchored for LA5 relative to advanced economies (series 1997–2024).
  - Fiscal policy can hinder monetary policy effectiveness:
    - Response to a 100-Basis-Point Monetary Policy Tightening Shock at 18 Month Horizon (Percent): Local projection results show changes in inflation, inflation expectations, and LT yields at the 18-month horizon.
    - Impact of Fiscal Deficit Shocks: Headline Inflation (Percent): High debt is modeled as an interaction measured whether debt is higher than the 80th percentile; plots depict the response to a 100-basis point shock, indicating fiscal deficits can amplify inflation responses and reduce monetary policy effectiveness.

*Source: whd-executive-board-meeting-october-2025-webpage-eng - Section 1*

### Section 2

### whd-executive-board-meeting-october-2025-webpage-eng - Section 2

### Fiscal-monetary interactions and macro implications
- High levels of public debt can hinder the impact of monetary policy on key variables.
- Fiscal shocks can push inflation and inflation expectations up.
- Adequate fiscal stances would support monetary policy implementation.
- Note: LA7 is simple average. LA7 = Brazil, Chile, Colombia, Mexico, Paraguay, Peru, Uruguay; MP = monetary policy.

### Empirical evidence on fiscal shocks and monetary transmission
- Change in the level of each variable at 1- and 2-year horizons is computed from World Economic Outlook forecast errors.
- Variables affected include: Inflation; Inflation expectations; Exchange rate; Long-term yields.
- Scenarios considered: Contractionary (Con) and expansionary (Exp) fiscal and monetary policy combinations.

### Productivity levels and misallocation in Latin America
- Low TFP levels in Latin America are documented relative to the United States (USA=1).
- 43 percent TFP gap with AE (advanced economies).
- Aggregates are purchasing-power-parity GDP-weighted averages.
- Advanced economies = DEU, FRA, ESP; Emerging Asia = MYS, THA, VNM; Emerging Europe = SVN, SVK, LVA, LTU, ROU; Latin America = BRA, COL, MEX.

### Misallocation and firm-level frictions
- TFP losses from misallocation are attributed to frictions that constrain more productive firms from expanding.
- Regression approach: Hsieh and Klenow (2009) measure of frictions regressed on firm-level productivity, controlling for year-country-four-digit industry fixed effects; standard errors clustered at the industry and country level.
- Observations are weighed to match the size distribution in the World Business Environment Survey.

### Firm dynamics and contributions to TFP growth
- Low TFP growth in Latin America is largely explained by surviving firms, which show weak firm-level productivity growth.
- Decomposition follows Melitz and Polanec’s (2015) methodology; aggregates are purchasing-power-parity GDP-weighted averages.
- Regional groupings use 2005 World Economic Outlook classification. Advanced economies = DEU, FRA, ESP; Emerging Asia = MYS, THA, VNM; Emerging Europe = SVN, SVK, LVA, LTU, ROU; Latin America = BRA, COL, MEX.

### Frictions constraining productivity: taxes, credit, and market structure
- Size-based tax policies offer incentives to remain small.
  - Simplified regimes included: BRA = Microempreendedor Individual (MEI), Simples Nacional (SIMPLES); CHL = Régimen Tributario enfocado a pequeños y medianos contribuyentes (Pro-Pyme); COL = Régimen Simple de Tributación (RST); MEX = Régimen simplificado de confianza (RESICO), Régimen de Incorporación Fiscal (RIF); PER = Régimen Especial de Renta (RER), Régimen MYPE Tributario (RMT).
  - For BRA - SIMPLES, COL - RST, and MEX - RESICO, the median statutory CIT within each STR schedule by revenue bracket and/or sector is used. For MEX- RIF, the year-1 schedule is used. For PER-RER, there is no annual CIT, but a statutory monthly revenue-based quota of 1.5 percent.
  - CIT = corporate income tax; STR = simplified tax regime.
- Total Credit to Non-financial Sector, 2022-24 (Percent of GDP; quarterly average) indicates credit constraints can limit firm growth.
- Market dominance of surviving firms reduces pressure to grow and deters entry; TFP and perceptions of openness to competition shown where Y-axis: USA=1.

### Key data and methodological sources
- Sources: Calderon, Dhungana, and Wales (forthcoming); Consensus Economics; Haver Analytics; IMF, World Economic Outlook database; IMF staff calculations; Penn World Table 10.01; Orbis; World Bank Enterprise Surveys; Bank for International Settlements; Dabla-Norris and others (2018); World Economic Forum; national authorities.
- Notes emphasize weighting schemes, country group definitions, and caveats about perception-based indicators in the Global Competitiveness Index 4.0.

### Main messages and policy recommendations (To Conclude...)
- Growth in LAC remained stable during the first half of 2025, while the disinflation process slowed in some countries.
- The region is projected to decelerate slightly in 2026, with risks tilted to the downside, and inflation convergence toward targets will likely take longer than previously envisaged in a few countries.
- Monetary policy should remain vigilant of global trade developments and financial conditions, inflation expectations, and fiscal policy stances.
  - It should continue to rely on strong policy frameworks, including central bank independence.
- Fiscal consolidation is critical for rebuilding buffers, stabilizing debt, and supporting inflation convergence, and cannot be further delayed.
- Advancing structural reforms will be crucial to address lackluster productivity growth associated with persistent resource misallocation.
- Strong institutions and low public debt can help mitigate the impact of high uncertainty on growth.

*IMF | Western Hemisphere Department - Regional Economic Outlook — whd-executive-board-meeting-october-2025-webpage-eng - Section 2*

---


_Source: https://www.imf.org/-/media/files/publications/reo/whd/2025/october/english/whd-executive-board-meeting-october-2025-webpage-eng.pdf_