Regional Economic Outlook
Western Hemisphere
Regional Economic Outlook
October 2022Recent developments in the Western Hemisphere—that is, the United States/Canada and Latin America and the Caribbean (LAC)—have been dominated by the impact of two distinct global shocks: the COVID-19 pandemic and then the Russian invasion of Ukraine. A third shock—the tightening of financial conditions—is now shaping the outlook. After contracting sharply in 2020, most of the Western Hemisphere’ economies recovered strongly in 2021 and early 2022, helped by the global recovery, the normalization of service sectors, and booming commodity prices. However, inflation pressures built up with pandemic-related disruptions, expansionary policies, rebounding demand, and the impact of the war in Ukraine on energy and food prices. The swift response of LAC’s monetary authorities to rising inflation—well ahead of other economies—helped contain price pressures and keep long-term inflation expectations anchored, but inflation remains high. Amid global monetary and financial tightening, and the ensuing slowdown in global growth and softening of commodity prices, activity is expected to decelerate throughout the Western Hemisphere in late 2022 and 2023, while inflation pressures are expected to recede gradually. Downside risks dominate the outlook and stem from tighter financial conditions, a more pronounced global slowdown, and entrenched inflation. For LAC, a sharp fall in commodity prices and social unrest are important risks. With inflation yet to abate and most economies still operating at or near potential, monetary policy should avoid easing prematurely and must stay the course. Clear communication of policy intentions will be key to reducing uncertainty and keeping inflation expectations anchored. Fiscal support deployed to mitigate the impact of inflation on the most vulnerable should be accompanied by compensating measures, where fiscal space does not exist, but also support monetary authorities’ efforts to tame inflation. Given rising financing costs, strengthening fiscal frameworks and advancing with inclusive fiscal consolidation—that protects key social objectives—will be essential to credibly putting public debt on a firm downward path while ensuring social stability. Boosting LAC’s medium-term growth requires raising productivity and good-quality public and private investment. Supply-side policies should focus on strengthening human capital, simplifying and modernizing labor regulations, and lifting barriers to firm entry and exit.
Read more: Regional Economic Outlook for the Western Hemisphere, October 2022
This web page presents information about the work of the IMF in Central America, Panama and the Dominican Republic, including the activities of the IMF Regional Representative Office. Additional information can be found on the IMF country pages of the enlarged Central American region (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and Panama), including official IMF reports and Executive Board documents in English and Spanish that deal with Central America as a region and with each of its countries.
At a Glance
- CA-7: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama and Dominican Republic
- Costa Rica Joined the Fund on January 08, 1946
- El Salvador, Nicaragua, and Panama Joined the Fund on March 14, 1946
- Dominican Republic and Guatemala Joined the Fund on December 28, 1945
- Honduras Joined the Fund on December 27, 1945
- Total Quotas: Net cummulative allocation SDR 1,230.60 Million; Holdings: SDR 1,027.62 Million
- Loans outstanding: ECF arrangements (Honduras and Nicaragua) SDR 132.54 Million;
- Stand-by Arrangements (Dominican Republic) SDR 703.76 Million
IMF's Work on Central America
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May 24, 2023
Series:Country Report No. 2023/172
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May 24, 2023
Series:Country Report No. 2023/173
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IMF Executive Board Concludes 2023 Article IV Consultation with Guatemala
May 23, 2023
Guatemala's solid track record of prudent macroeconomic policies and large remittance inflows provided the country with large buffers to weather a challenging global environment and tightened global financial conditions. In 2022, Guatemala's real GDP growth was 4.1 percent (3.4 percent projected in 2023), with the fiscal deficit below 2 percent of GDP—driven by tax collection overperformance and high import prices—and the stock of public debt below 30 percent of GDP. Domestic private demand continued to be strong, and bank credit to the private sector grew at double-digit rates.
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IMF Staff Completes 2023 Article IV Mission to the Dominican Republic
May 22, 2023
An International Monetary Fund (IMF) team led by Mr. Emilio Fernández-Corugedo visited the Dominican Republic from May 8 to May 19 to conduct the 2023 Article IV Consultation discussions.
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April 28, 2023
“The Costa Rican authorities and IMF staff have reached a staff-level agreement on the completion of the fourth review under the EFF and the first review under the RSF. The agreement is subject to approval by the IMF Executive Board, contingent on the implementation of a prior action by the authorities linked to implementing the public employment law.