Removing Obstacles and Creating Opportunities for Sustainable Growth

IMF News, July 26, 2018

Source details

Canonical URL

Removing Obstacles and Creating Opportunities for Sustainable Growth

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Published: July 26, 2018

Challenges for the region

• Conference has served as a forum for key economic and financial issues over the last 16 years.
• Growth performance across CAPDR has been uneven:
  • In the Northern Triangle countries – El Salvador, Guatemala, and Honduras – as well as in Nicaragua, income per capita has been stagnant for the past 35 years.
  • Costa Rica, the Dominican Republic and Panama have grown much faster, narrowing the income gap with the United States.
• Divergence explained in part by capacity to innovate and adapt:
  • Northern Triangle countries are still diversifying into higher-value added and more complex products and sectors.
  • Costa Rica, Dominican Republic, and Panama have shifted resources into higher-productivity sectors and rank the highest in Latin America and the Caribbean in terms of economic complexity.
  • Examples of sector shifts:
  • Costa Rica: electronics, mechanical parts, financial services, and medical equipment.
  • Panama: logistics and transportation services.
  • Dominican Republic: electrical equipment and medical instruments.
• Structural and macroeconomic impediments dragging on growth and foreign investment:
  • Infrastructure and education gaps.
  • Large informal sectors.
  • High crime and poor rule of law.
  • Limited fiscal space.
  • Low financial intermediation.

Regional outlook and recent developments

• Central America and the Dominican Republic: growth remains strong in 2018, driven by robust U.S. growth and higher remittances due to uncertainty about future migration policies in the U.S.
• Country-specific headwinds:
  • Political uncertainty in Nicaragua.
  • Temporary disruptions in the construction sector in Panama.
  • These factors contributed to a small downward revision to regional growth to 4 percent in 2018.

Policy priorities and recommendations

• Regionwide policies needed to remove constraints to investment and employment growth:
  • Improvements in the business environment.
  • Strengthening institutions to raise productivity and limit incentives for outward migration.
• For the Northern Triangle countries:
  • Effective policies to improve the security situation are critical.
• To realize the economic and social potential of women in CAPDR:
  • Improved access to education.
  • Higher investment in infrastructure and information technology.
  • Targeted measures to support working women with children.

Technology and Fintech

• Fintech is affecting consumers and businesses across the region:
  • From local merchants seeking loans, to families planning for retirement, to foreign workers sending remittances.
• Emerging technologies referenced:
  • Artificial intelligence.
  • Distributed ledgers.
• Potential impacts:
  • Large efficiency gains in payments, financing, investments and insurance.
  • Risks to financial stability and integrity, particularly where operations occur outside the purview of financial regulation and supervision.
• Regional learning:
  • Experience of Argentina, Brazil, Chile, Colombia, and Mexico—the top five Fintech markets in Latin America—will inform policy priorities for the region.

Climate change and resilience

• Managing the impact of climate change is a defining global challenge of this century and is inseparable from reducing poverty.
• IMF emphasis:
  • Climate change is at the forefront of IMF work.
• Regional preparedness:
  • CAPDR countries are developing preparedness to deal with climate consequences.
• Macroeconomic implications:
  • Policies will need to be calibrated to accommodate more frequent weather-related shocks.
  • This includes building policy space to respond to shocks and upgrading infrastructure to enhance economic resilience.

Conference structure and purpose

• Main themes of the conference focus on removing obstacles and creating opportunities for sustainable, higher, and more inclusive growth.
• Sessions outlined:
  • Session 1: Outlook and challenges facing the global economy and the region.
  • Session 2: Anchor theme—Removing Obstacles and Creating Opportunities for Sustainable Growth.
  • Session 3: Technology/Fintech.
  • Session 4: Recent experiences in addressing climate change.
• Purpose:
  • Provide practical insights on how the region can achieve higher and more inclusive growth.

Source: Opening Remarks by Mitsuhiro Furusawa, IMF Deputy Managing Director, Regional Conference for Central America, Panama, and the Dominican Republic, Honduras, July 26, 2018.

References

• Mitsuhiro Furusawa
• Costa Rica and the IMF
• Dominican Republic and the IMF
• Guatemala and the IMF
• Honduras and the IMF
• Nicaragua and the IMF
• Panama and the IMF
• IMF-World Bank Debt Sustainability Framework for Low-Income Countries -- A Factsheet
• Speeches
• PRESS CENTER
• https://www.imf.org/en/home