Outlook for Latin America and the Caribbean: An Uneven Recovery
Western Hemisphere, October 12, 2018
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Bibliographic details
- Published: October 12, 2018
- Series: Western Hemisphere
Overview and context
- Publication date: October 2018
- Regional backdrop: escalating trade tensions, tighter financial conditions, and volatile commodity markets have moderated and made the recovery more uneven across Latin America and the Caribbean (LAC).
Key recent developments and country-specific dynamics
- Brazil and Mexico: recovery has slowed.
- Argentina: recovery has come to a halt.
- Central America: higher oil prices coupled with increased political uncertainty have dampened the near-term outlook in several economies.
- Venezuela: there is still no end in sight to the economic and humanitarian crisis.
- Andean economies: better terms of trade over the past year and improvements in consumer and business confidence have provided a fillip to growth prospects in some economies.
- Caribbean: activity is recovering, reflecting the uptick in tourism owing to robust US and global growth.
Risks and financing constraints
- Downside risks to economic prospects in LAC have risen and potential for upside surprises has receded.
- Major currencies have registered sharp declines.
- Debt levels remain at relatively elevated levels in many economies in the region.
- Scope for near-term countercyclical policy support is generally limited.
- External financing needs are relatively high in some countries and capital flows are ebbing; policymakers should be prepared for further capital outflow pressures.
Policy guidance and near-term measures
- Exchange rate flexibility will remain key.
- Foreign exchange market intervention could be appropriate under excessive volatility and market dislocation.
Medium-term reform priorities
- Increase saving and investment rates.
- Reduce misallocation of resources.
- Make labor markets more flexible and reduce informality.
- Liberalize trade.
- Improve the business climate.
- Continue strengthening anti-corruption frameworks.
Source: Outlook for Latin America and the Caribbean: An Uneven Recovery, October 2018.
Content in this bundle
- Regional economic Outlook: Western Hemisphere - Background Papers; October 2018
- Regional Economic Outlook: Western Hemisphere Region - An Uneven Recovery; October 2018