Western Hemisphere

Regional Economic Outlook: Western Hemisphere

April 2007

The past year has been one of strong economic performance for the Western Hemisphere, notwithstanding somewhat slower growth in the United States in recent quarters. Can this performance be sustained, and what challenges does the region face? Reviewing macroeconomic prospects and risks, this report pays particular attention to the influence of the external environment on Latin America, and addresses the question of whether Latin America has now succeeded in breaking with its history of periodic growth reversals.


Executive Summary
I. The Global Economy and the Outlook for the United States and Canada
  The Global Context
  The Outlook for the United States and Canada
II. The Outlook for Latin America and the Caribbean
  Main Developments and Prospects
  Financial Sector
  External Developments
  Monetary and Exchange Rate Policies
  Fiscal Policy
III. The Effect of the External Environment on Growth in Latin America
  Alternative World Growth Paths
  Alternative Commodity Price Assumptions
  Tighter Emerging Market Financing Conditions
  A Combined Assessment
IV. Sustaining the Expansion and Raising Long-Term Growth
  Toward Higher Long-Term Productivity Growth
  Sustaining the Expansion
  Main Economic Indicators
  Modeling the Impact of External Shocks on Latin America
1. The Slowdown in the U.S. Housing Market
2. Brazil: Revision of National Accounts
3. The Caribbean: Growth and Fiscal Effects of the 2007 Cricket World Cup
4. Peru's New Economic Reform Program
5. Offshore-Licensed Financial Entities in Central America and the Dominican Republic
6. Productivity, Investment, and Employment in the Current Expansion
7. Education Quality, Human Capital, and Growth in Latin America