Under Pressure

IMF Blog, August 27, 2015

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Between 2004 and 2013, Latin America recorded impressive growth and strong progress on a range of social issues.
High commodity prices combined with strengthened economic management and progressive social policies to propel the region forward.
The period contrasted with the 2008–09 global financial crisis, which mired many advanced economies in recession while emerging markets, including many in Latin America, power ahead—leading some observers to dub the period the “Latin American decade.”
As the world’s economic leaders prepare to gather in Lima, Peru, in October for the Annual Meetings of the International Monetary Fund and the World Bank, the outlook has weakened.

Growth per capita ground to a halt in 2014 and budgets in many countries are under pressure.
A decline in the price of commodities—the backbone of the region’s exports—and an overall moderation of global trade weigh on the region’s economies.
Avoiding a prolonged slowdown is critical to realizing the region’s key goals: raising incomes of the poor, strengthening education and health care, and ensuring widely shared economic gains.

José Antonio Ocampo (Columbia University professor and former Colombian Finance Minister) argues that to regain its footing, Latin America must upgrade its production structure and diversify its economies, lessening the dependence on commodities.
Alejandro Werner (head of the IMF’s Western Hemisphere Department) sees a loss of confidence as the greatest threat and suggests that clarifying the direction of economic policies can boost both business and consumer confidence—a key force for long-term sustainable growth.
Nora Lustig emphasizes the urgency of addressing inequality.
Daniel Kaufmann highlights fostering a culture of good governance as a reform area that can unlock economic potential.

Articles examine recent developments in the region concerning capital flows, central bank mandates, and trade.
A story examines Cuba’s potential as a major player in Caribbean tourism.
Elsewhere in the issue, topics include:
- the effect of unconventional monetary policy on emerging markets,
- trends in U.S. labor force participation,
- Islamic finance,
- financial stress testing.

Journalist and author Alan Wheatley profiles Sabina Alkire, whose passion for measuring and eradicating poverty has earned her a place among today’s top thinkers on global development.

Content from "Under Pressure" (F&D), Jeff Hayden, August 27, 2015.