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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December 2, 2023
The Government of Costa Rica announced today the creation of a Public-Private Partnership (PPP) Project Preparation Facility (PPF) to leverage public and private sector resources to develop sustainable and efficient infrastructure projects.
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Nicaragua: Staff Concluding Statement of the 2023 Article IV Mission
November 22, 2023
Nicaragua’s economy has remained resilient in the face of multiple shocks, supported by appropriate economic policies, substantial buffers, and multilateral support. After a very strong rebound in 2021, the economy grew at a steady pace since 2022 on the back of private consumption and exports. Real GDP is expected to grow by 4 percent in 2023, inflation to slow down, and the fiscal position of the central government to maintain a small surplus and healthy government deposits.
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IMF Staff Concludes Visit to Honduras
November 10, 2023
An International Monetary Fund (IMF) team led by Ricardo Llaudes and supported by resident representative Christian Henn visited San Pedro Sula and Tegucigalpa, Honduras, during November 5-9, 2023, to discuss recent economic developments and the authorities’ implementation of their economic program supported by the Fund through the ECF/EFF arrangements approved in late September.
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October 27, 2023
An International Monetary Fund (IMF) staff team, led by Mr. Ding Ding, visited San Jos é during October 18–27.
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WESTERN HEMISPHERE DEPARTMENT PRESS BRIEFING
October 13, 2023
Most Latin American countries and the Caribbean have successfully weathered recent shocks, very large shocks of the world economy. They rebounded strongly from the Pandemic and showed continued resilience in 2023 at the beginning of this year. But reality is that growth is slowing from 4.1 percent in 2022 to 2.3 percent this year and also in 2024.