{
  "title": "Transcript of Western Hemisphere Department Press Briefing",
  "publication": "IMF News, April 21, 2017",
  "sourceUrl": "https://www.imf.org/en/news/articles/2017/05/01/tr042117-transcript-of-western-hemisphere-department-press-briefing",
  "canonical": "https://www.imf.org/en/news/articles/2017/05/01/tr042117-transcript-of-western-hemisphere-department-press-briefing",
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  "summary": "The region is \"recovering slowly\" from the recession of the previous year and from very low or negative growth in 2015.",
  "publishDate": "2017-04-21",
  "sections": [
    {
      "heading": "Regional outlook and medium-term projections",
      "content": "- The region is \"recovering slowly\" from the recession of the previous year and from very low or negative growth in 2015.\n- Average growth:\n  - 2017: expected average growth of 1.1% (after a negative 1% in the prior year).\n  - Medium term: projected to stabilize around 2.6%.\n- Structural assessment:\n  - Growth potential for the region is estimated to be \"substantially lower\" than in the previous decade.\n  - Key structural priorities to raise medium-term growth: eliminate bottlenecks to investment, increase productivity, accumulate human capital, improve education quality, improve infrastructure, boost female labor force participation, and strengthen anti-corruption legal reforms."
    },
    {
      "heading": "Country-level summaries and forecasts",
      "content": "- Argentina\n  - 2016: economy contracted \"a little more than 2%\".\n  - 2017: IMF expects growth of 2.2%.\n  - Inflation debate: IMF cited Argentina inflation expectations in the WEO as \"around 21%\" (government targets \"around 17%\"); Argentina ranks as the sixth country with highest expected inflation in the WEO table.\n  - Fiscal approach: IMF supports a steady, well-communicated fiscal adjustment accompanying disinflation; pace should avoid excessive demand withdrawal while restoring fiscal sustainability.\n  - External stability: authorities should be conscious of potential capital flow reversals; IMF supports reserve accumulation.\n\n- Brazil\n  - Deep recession prior years: contractions of about 3.8% in 2015 and 3.6% in 2016 referenced in discussion (earlier in remarks another figure for 2016 contraction was 3.5%).\n  - 2017: IMF projection of 0.2% growth.\n  - 2018: IMF baseline projects 1.7% growth (Finance Minister publicly stated 3% for 2018; IMF views this as unlikely given leveraged household and corporate balance sheets).\n  - Pension reform:\n    - IMF baseline assumes a \"good\" pension reform will be passed soon.\n    - Minister Meirelles said a reform reaching 75% of the original proposal implies savings of $600 billion over 10 years; IMF will assess strength and exact parameters during the Article IV mission.\n  - Political/corruption context: \"Lava Jato\" and related issues have affected confidence/liquidity; stronger, higher-quality reforms produce larger gains for confidence and growth.\n\n- Mexico\n  - Growth: IMF anticipates 1.7% in 2017 versus 2.3% in 2016.\n  - Factors restraining growth: NAFTA renegotiation uncertainty affecting investment; weaker real wage growth (higher inflation) affecting consumption.\n  - Public debt: around 55% of GDP.\n  - Policy priorities: preserve strong macro framework (fiscal discipline, inflation targeting), diversify products and trading partners (including Asia and Europe), consider somewhat more ambitious fiscal targets to reduce public debt.\n\n- Chile\n  - 2017: growth expected to remain at 1.7%.\n  - Recent episodes: mining strikes likely produced a technical recession in the latest quarter; underlying conditions point to recovery once supply disruptions end.\n\n- Colombia\n  - Adjustment following a near 50% decline in the value of exports.\n  - Policy: timely restrictive policies produced an orderly deceleration; inflation spike (around 8%) viewed as transitory and returning toward target.\n\n- Ecuador\n  - 2017: IMF projects a contraction of 1.6%.\n  - Rationale: sustained adjustment following the collapse in oil prices; slightly milder contraction than previous WEO due to somewhat higher oil prices and more accommodative financing conditions.\n\n- Venezuela\n  - 2016: economy contracted 18%.\n  - 2017: IMF estimated contraction of 7%.\n  - Inflation: IMF noted inflation \"moving at four-digit rates\" and \"walking toward hyperinflation\"; IMF had projected 720% (earlier number mentioned), while the WEO reported a consumer price inflation of 274% December-over-December from the Central Bank of Venezuela (acknowledged as the official, lower-end estimate); IMF highlighted a severe humanitarian crisis.\n\n- Caribbean\n  - Prospects improving with recovery in commodity-exporters and tourism-dependent economies.\n  - 2016: significant recessions in commodity exporters (e.g., Surinam, Trinidad and Tobago).\n  - Jamaica: stabilization programs showing positive results and accelerating growth.\n  - Vulnerability: public sector debt remains an important regional vulnerability.\n\n- Central America\n  - Growth: maintaining an average around 4%, helped by Panama and the Dominican Republic.\n  - Sustainability: IMF judges the growth performance in Central America to be sustainable, though averages are influenced by high-growth outliers."
    },
    {
      "heading": "Risks, spillovers, and macro-financial guidance",
      "content": "- Political/electoral risk\n  - Upcoming electoral cycle across the region (elections in Argentina, Chile, Mexico, Brazil, Venezuela, Paraguay within ~18 months) increases uncertainty, which can delay investment and consumption and dampen near-term growth.\n  - IMF concern centers on uncertainty effects rather than specific policy ideology.\n- Corruption and governance\n  - Corruption episodes (e.g., Odebrecht, \"Lava Jato\") have macroeconomic implications via liquidity, confidence, and investment channels; addressing corruption is a priority for macro stability and growth.\n- Spillovers from Venezuela\n  - Migration is the principal spillover channel; trade and financial linkages are limited, so direct economic contagion has been limited to date.\n- Exchange rate regime guidance\n  - IMF view: exchange rate flexibility has served the region well and should be the first line of defense against shocks.\n  - Where countries opt for less flexible regimes, they must offset with consistent policies (e.g., strong fiscal positions, supporting policies).\n- Reserves and capital flows\n  - Countries (e.g., Argentina) should remain mindful of capital flow volatility and consider reserve accumulation as insurance against global reversals."
    },
    {
      "heading": "Policy recommendations and priorities emphasized by IMF officials",
      "content": "- Strengthen medium-term growth by:\n  - Removing structural bottlenecks to investment.\n  - Raising productivity and human capital accumulation.\n  - Improving education quality and infrastructure.\n  - Increasing female labor force participation where low.\n  - Continuing legal reforms to strengthen anti-corruption frameworks and governance.\n- Fiscal policy guidance:\n  - Pursue steady, well-communicated fiscal consolidation paths that avoid abruptly contracting demand during fragile recoveries.\n  - For countries with fixed or less flexible exchange rate regimes, ensure complementary macroeconomic policies (strong fiscal stance, etc.).\n- Structural reforms:\n  - Pension reform is critical in Brazil to sustain the expenditure cap and fiscal sustainability; reform strength matters for confidence and growth.\n  - Diversify trade partners (including with Asia and Europe) to reduce reliance on any single market.\n- Crisis and contingency planning:\n  - Accumulate reserves as insurance against capital flow reversals.\n  - Closely monitor political/electoral developments for their potential to generate investment wait-and-see effects."
    },
    {
      "heading": "Key statistics and projections (as stated in the briefing)",
      "content": "- Regional average growth:\n  - 2017 expected: 1.1%\n  - Medium-term projection: 2.6%\n- Country highlights:\n  - Argentina: 2016 contraction \"a little more than 2%\"; 2017 projected 2.2%.\n  - Brazil: 2016 contraction about 3.5% (also referenced 3.6%/3.8% for 2015/2016); 2017 projected 0.2%; 2018 baseline projection 1.7%.\n  - Mexico: 2016 growth 2.3%; 2017 projected 1.7%; public debt around 55% of GDP.\n  - Chile: 2017 projected 1.7%.\n  - Colombia: exports fell \"almost 50%\"; inflation spike to about 8% was transitory.\n  - Ecuador: 2017 projected contraction of 1.6%.\n  - Venezuela: 2016 contraction 18%; 2017 projected contraction 7%; WEO consumer price inflation reported as 274% December-over-December (official Central Bank of Venezuela number); IMF earlier projection cited 720% in discussion.\n  - Central America: maintaining average growth \"around 4%\".\n- Pension reform in Brazil: minister referenced a 75% version of the proposal equating to savings of $600 billion over 10 years (IMF will assess exact impacts during the Article IV mission).\n\nTranscript of Western Hemisphere Department Press Briefing, Washington D.C., April 21, 2017 — IMF Communications Department\n\n---\n\n\n References\n\n- People's Republic of China and the IMF\n- Argentina and the IMF\n- Brazil and the IMF\n- Chile and the IMF\n- Colombia and the IMF\n- Ecuador and the IMF\n- El Salvador and the IMF\n- Mexico and the IMF\n- República Bolivariana de Venezuela and the IMF\n- Trinidad and Tobago and the IMF\n- United States and the IMF\n- IMF Policy Advice -- A Factsheet\n- The IMF and Good Governance -- A Factsheet\n- Transcripts\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2017/05/01/tr042117-transcript-of-western-hemisphere-department-press-briefing"
    }
  ],
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    "[Markdown version](/en/news/articles/2017/05/01/tr042117-transcript-of-western-hemisphere-department-press-briefing/index.md)",
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    "Published: April 21, 2017",
    "The region is \"recovering slowly\" from the recession of the previous year and from very low or negative growth in 2015.",
    "Average growth:",
    "Structural assessment:",
    "Argentina",
    "Brazil",
    "Mexico",
    "Chile",
    "Colombia",
    "Ecuador",
    "Venezuela",
    "Caribbean",
    "Central America",
    "Political/electoral risk",
    "Corruption and governance",
    "Spillovers from Venezuela",
    "Exchange rate regime guidance",
    "Reserves and capital flows",
    "Strengthen medium-term growth by:",
    "Fiscal policy guidance:",
    "Structural reforms:",
    "Crisis and contingency planning:",
    "Regional average growth:",
    "Country highlights:",
    "Pension reform in Brazil: minister referenced a 75% version of the proposal equating to savings of $600 billion over 10 years (IMF will assess exact impacts during the Article IV mission).",
    "[People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)",
    "[Argentina and the IMF](http://www.imf.org/external/country/ARG/index.htm)",
    "[Brazil and the IMF](http://www.imf.org/external/country/BRA/index.htm)",
    "[Chile and the IMF](http://www.imf.org/external/country/CHL/index.htm)",
    "[Colombia and the IMF](http://www.imf.org/external/country/COL/index.htm)",
    "[Ecuador and the IMF](http://www.imf.org/external/country/ECU/index.htm)",
    "[El Salvador and the IMF](http://www.imf.org/external/country/SLV/index.htm)",
    "[Mexico and the IMF](http://www.imf.org/external/country/MEX/index.htm)",
    "[República Bolivariana de Venezuela and the IMF](http://www.imf.org/external/country/VEN/index.htm)",
    "[Trinidad and Tobago and the IMF](http://www.imf.org/external/country/TTO/index.htm)",
    "[United States and the IMF](http://www.imf.org/external/country/USA/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[The IMF and Good Governance -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/the-imf-and-good-governance)",
    "[Transcripts](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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