Western Hemisphere

A multispeed global recovery is under way, with some emerging markets in the lead and the major advanced economies growing more slowly. This macroeconomic setting has brought a return to easy global financial conditions and high commodity prices—a situation likely to be sustained for some time but unlikely to be permanent. Against that external backdrop, the recovery in the Latin America and Caribbean region overall is advancing faster than anticipated, but moving at different speeds across countries. The report discusses the varying policy challenges that different countries face as the global recovery proceeds. Chapter 1 analyzes the global setting and the outlook for the United States and Canada in particular, while Chapter 2 focuses on the outlook for Latin America and the Caribbean. Chapter 3 looks in depth at the challenges arising from the return of easy external financial conditions. Together with high commodity prices, such conditions represent favorable “tailwinds” for many countries of the region, but also carry risks for policymakers to address.

Contents

Preface
Executive Summary
1.	Global, U.S., and Canadian Outlook
	The Global Backdrop—A Recovery with Uneven Speed
	United States—Recovery Is Still Policy Driven
	Canada—Recovery Is Getting Entrenched
	Implications for the Latin American and Caribbean Region
2.	Outlook for Latin America and the Caribbean
	Growth is Gaining Momentum
	Different Speed of Recovery—Different Policy Challenges
	Financially Integrated Commodity Exporters
	Bouncing Back
	Policy Challenges: Managing Good Times
	Further Strengthening Policy Frameworks
	Tourism Intensive Commodity Importers
	Global Shocks Persisting
	Policy Challenges: Ensuring Fiscal Sustainability amid Low Growth
	Other Commodity Exporters
	Riding the Commodity Cycle
	Policy Challenges: Avoiding the Perils of Procyclicality
	Going Back to Financial Markets?
	Other Commodity Importers
	Traveling the Middle Ground
	Policy Challenges: Replenishing Buffers
	Concluding Remarks
3.	Challenges Arising from Easy External Financial Conditions
	What Are the Concerns?
	Booming Domestic Demand . . .
	And Currency Appreciation . . .
	May Lead to Vulnerabilities . . .
	And Hinder Competitiveness and Possibly Growth
	Policy Matters
	In the Past . . .
	And in the Future, when an Array of Policy Options Need to Be on the Table
Western Hemisphere: Main Economic Indicators    English | Spanish
Latin America and the Caribbean: Main Fiscal Indicators     English | Spanish
References
Boxes
1.1	Recent Developments in Financial Regulation Reforms
1.2	Rebalancing Global Demand: What Will Take Up the Baton from the U.S. 5 Consumer?
1.3	U.S. Monetary Policy: How Low for How Long?
2.1	Potential Spillovers from GIPS to Latin America
2.2	LAC Country Analytical Groupings
2.3	Impact of the Earthquake on Haiti and the Role of the IMF
2.4	The Global Crisis and Social Outcomes
2.5	Capital Inflows––An Aspect of “Good Times”
2.6	The Impact of Employment Conditions on Tourism, and Tourism on Output
2.7	Fiscal Performance and Commodity Cycles: Not a Standard Amusement Ride
3.1	When Are Financial Conditions “Easy”?
3.2	Capital Inflows when External Financial Conditions Are Easy
3.3	Real Appreciation and Trend Growth: An Overview on Dutch Disease and Related Concerns