## IMF Survey : Growth in Latin America and the Caribbean Slows Further

_IMF News, October 10, 2014_

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## Bibliographic details
- Published: October 10, 2014

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### Overview
- Economic growth in Latin America and the Caribbean has slowed more than anticipated, as weak growth in South America has outweighed an incipient recovery in Mexico.
- The IMF’s Regional Economic Outlook Update for the Western Hemisphere was released October 10 in Washington, D.C.

### Forecasts and projections
- GDP growth in Latin America and the Caribbean is projected to expand by 1.3 percent in 2014, the second-lowest growth rate in 12 years and more than one percentage point below the rate projected in April 2014.
- Growth for 2015 is expected to recover to 2.2 percent.
- Economic activity in the financially integrated economies (Brazil, Chile, Colombia, Mexico, Peru, and Uruguay) is projected at:
  - 2.7 percent for 2014
  - 3.5 percent for 2015
- Bolivia, Ecuador, and Paraguay are expected to maintain fairly strong growth of 4–5 percent.
- Central America: growth is projected to remain steady at around 3 percent in 2014, with 2015 expected to bring only slightly higher growth.
- Caribbean: tourism-dependent economies are expected to expand by 1.1 percent in 2014 and 1.7 percent in 2015.
- Argentina and Venezuela are projected to be in recession both in 2014 and 2015.

### Drivers of the slowdown
- External factors: weakening of key commodity prices has created a sense of leaner times and caused the private sector to curb spending.
- Domestic factors: domestic policy uncertainties have further depressed confidence in several countries.
- Country-specific examples: Brazil’s economy suffered a further sharp slowdown, entering a “technical recession” in early 2014; economic conditions also dimmed markedly in Chile and Peru, where investment and durable consumption led the slowdown; Mexico’s economy has recently gathered pace following several quarters of underperformance through early 2014.

### Significant risks to the outlook
- A sharper slowdown in China remains a key risk for commodity exporters in Latin America and the Caribbean (comment by Alejandro Werner, Director of the IMF’s Western Hemisphere Department).
- The outlook could be undermined by renewed financial volatility, including a faster-than-expected rise in U.S. interest rates.
- On the upside, Mexico, Central America, and parts of the Caribbean would benefit from a stronger U.S. recovery.

### Policy priorities and recommendations
- Structural reforms are critically needed to increase productivity and potential growth; typical priorities include:
  - Improve the business environment.
  - Enhance the performance of education systems.
  - Shift scarce budget resources toward critical infrastructure needs.
- Monetary policy and flexible exchange rates are recommended as the most suitable tools to deal with cyclical fluctuations.
- The report cautions against using fiscal stimulus in countries where economic slack is limited or public finances are weak.

*IMF Survey : Growth in Latin America and the Caribbean Slows Further — IMF Survey, October 10, 2014.*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Country Focus](https://www.imf.org/en/news/country-focus)
- [Read the report](http://www.imf.org/external/pubs/ft/reo/2014/whd/eng/wreo1014.htm)
- [Latest global outlook](http://www.imf.org/external/pubs/ft/survey/so/2014/NEW100714A.htm)
- [Global financial system](http://www.imf.org/external/pubs/ft/survey/so/2014/POL100814B.htm)
- [Blog: U.S. monetary policy’s impact on Latin America](http://blog-imfdirect.imf.org/2014/01/16/u-s-monetary-policy-and-its-effects-on-latin-america/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar101014c_