{
  "title": "Spring Is in the Air in Parts of Latin America",
  "publication": "IMF Blog, April 25, 2012",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2012/04/25/spring-is-in-the-air-in-parts-of-latin-america",
  "canonical": "https://www.imf.org/en/blogs/articles/2012/04/25/spring-is-in-the-air-in-parts-of-latin-america",
  "overlayPath": "/en/blogs/articles/2012/04/25/spring-is-in-the-air-in-parts-of-latin-america/index.md",
  "summary": "Most of Latin America stands out for good performance in a subpar environment.",
  "sections": [
    {
      "heading": "Regional overview and growth outlook",
      "content": "- Most of Latin America stands out for good performance in a subpar environment.\n- Growth is generally solid, despite a slowdown late last year owing to policy tightening and global volatility.\n- Under the baseline scenario, regional growth is expected to moderate to near 3¾ percent in 2012, down from 4½ percent last year (but modestly up from our January projections).\n- Short-term risks, while receding, still tilt downwards: renewed European tensions or a large oil price shock could hit financial markets and global growth, triggering safe haven flows out of emerging markets, including Latin America."
    },
    {
      "heading": "Focus on inflation-targeting commodity exporters",
      "content": "- Countries highlighted: Brazil, Chile, Colombia, Peru, and Uruguay.\n- These countries represent close to 60 percent of the region’s total GDP.\n- They have generally fared well thanks to:\n  - Good economic policy management.\n  - Favorable external conditions (the “twin tailwinds” of high commodity prices and easy international financing).\n- The twin tailwinds may persist for a while, unless large shocks appear; even modest-sized shocks would probably not disrupt capital flows into the region for too long."
    },
    {
      "heading": "Policy challenges and recommendations",
      "content": "- Capacity and policy stance:\n  - The group of economies is mostly near or above full capacity; policies need to continue moving to neutral.\n  - The stimulus deployed to combat the 2008–09 financial crisis has been only partially unwound.\n  - Overheating remains a risk—credit and import growth have slowed but are still strong.\n- Fiscal policy:\n  - Continued fiscal normalization is essential to avoid driving an overheating cycle.\n  - Fiscal normalization helps reduce the burden on monetary policy, preserve credibility, and make space for a response if downside risks materialize again.\n  - Authorities should manage the abundance well, recognizing favorable conditions will not last forever.\n- Monetary and liquidity policy:\n  - Monetary policy should remain nimble and continue to serve as a first line of defense in case of adverse global shocks.\n  - The Lehman and European crises share the global propagation of liquidity shocks; effects included tightening in local markets and shortages of dollars.\n  - Policymakers need to be alert for droughts punctuating the rainfall and stand ready to support liquidity in their markets in the short term, as needed.\n- Strategic stance:\n  - Policymakers should carry both an umbrella and sunscreen: rebuild resilience and flexibility rather than resting easy or fighting risks that haven’t materialized yet."
    },
    {
      "heading": "Analytical notes featured in this edition of the Regional Economic Outlook",
      "content": "- (i) How global financial shocks affect output in Latin America.\n- (ii) The real spillovers from the region’s largest economies.\n- (iii) Developments in the housing and mortgage market in the region.\n- These notes will be discussed in forthcoming blogs.\n\nSpring Is in the Air in Parts of Latin America — Nicolás Eyzaguirre, April 25, 2012\n\n---\n\n\n References\n\n- Regional Economic Outlook for the Western Hemisphere\n- broad overview\n- https://www.imf.org/wp-content/uploads/2012/04/chart-23.jpg\n- https://www.imf.org/wp-content/uploads/2012/04/graphic-1.jpg\n\nSource: https://www.imf.org/en/blogs/articles/2012/04/25/spring-is-in-the-air-in-parts-of-latin-america"
    }
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    "[Markdown version](/en/blogs/articles/2012/04/25/spring-is-in-the-air-in-parts-of-latin-america/index.md)",
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    "Authors: Nicols Eyzaguirre",
    "Published: April 25, 2012",
    "Most of Latin America stands out for good performance in a subpar environment.",
    "Growth is generally solid, despite a slowdown late last year owing to policy tightening and global volatility.",
    "Under the baseline scenario, regional growth is expected to moderate to near 3¾ percent in 2012, down from 4½ percent last year (but modestly up from our January projections).",
    "Short-term risks, while receding, still tilt downwards: renewed European tensions or a large oil price shock could hit financial markets and global growth, triggering safe haven flows out of emerging markets, including Latin America.",
    "Countries highlighted: Brazil, Chile, Colombia, Peru, and Uruguay.",
    "These countries represent close to 60 percent of the region’s total GDP.",
    "They have generally fared well thanks to:",
    "The twin tailwinds may persist for a while, unless large shocks appear; even modest-sized shocks would probably not disrupt capital flows into the region for too long.",
    "Capacity and policy stance:",
    "Fiscal policy:",
    "Monetary and liquidity policy:",
    "Strategic stance:",
    "(i) How global financial shocks affect output in Latin America.",
    "(ii) The real spillovers from the region’s largest economies.",
    "(iii) Developments in the housing and mortgage market in the region.",
    "These notes will be discussed in forthcoming blogs.",
    "[Regional Economic Outlook for the Western Hemisphere](http://www.imf.org/external/pubs/ft/reo/2012/whd/eng/wreo0412.htm)",
    "[broad overview](http://www.imf.org/external/pubs/ft/survey/so/2012/CAR042512A.htm)",
    "[https://www.imf.org/wp-content/uploads/2012/04/chart-23.jpg](https://www.imf.org/wp-content/uploads/2012/04/chart-23.jpg)",
    "[https://www.imf.org/wp-content/uploads/2012/04/graphic-1.jpg](https://www.imf.org/wp-content/uploads/2012/04/graphic-1.jpg)"
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