{
  "title": "Transcript of October 2018 Western Hemisphere Department Press Briefing",
  "publication": "IMF News, October 13, 2018",
  "sourceUrl": "https://www.imf.org/en/news/articles/2018/10/13/tr101218-transcript-of-october-2018-western-hemisphere-department-press-briefing",
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  "summary": "Growth forecast for Latin America and the Caribbean marked down to 1.2 percent in 2018 and 2.2 percent in 2019.",
  "publishDate": "2018-10-13",
  "sections": [
    {
      "heading": "Regional growth and outlook",
      "content": "- Growth forecast for Latin America and the Caribbean marked down to 1.2 percent in 2018 and 2.2 percent in 2019.\n- Private investment: after contracting for three years, private investment is estimated to have stopped being a major drag on growth in 2017, is gaining further strength in 2018, and is expected to accelerate in 2019.\n- Medium-term per capita growth: the region is estimated to grow at about 1.9 percent in per capita terms over the medium term.\n- Global comparison: question raised in the briefing referenced a world growth rate of 3.7 percent."
    },
    {
      "heading": "Divergent country developments and near-term drivers",
      "content": "- Argentina\n  - Recovery turned into negative growth as external headwinds were amplified by domestic vulnerabilities and characteristics.\n  - IMF reached a staff-level agreement on the first review of the Argentina program; expectation that the Board will meet before the end of this month to consider documents underpinning the standby arrangement.\n  - IMF view: the program will be based on an agreed framework aligned with the IMF’s current forecasts; no additional fiscal measures are required beyond those in the budget to achieve the zero primary balance given similar nominal GDP outcomes.\n- Brazil\n  - Short-term prospects weighed down by the truckers' strike in May, tightening financial conditions, and election-related uncertainties.\n  - IMF note: privatization can be one element among many to address fiscal and growth challenges; case-by-case assessment of public assets and state-owned enterprises is essential.\n- Mexico\n  - Lingering uncertainty on the final trade agreement in North America and tight financial conditions point to a more gradual recovery than previously expected.\n  - Incoming economic team: IMF observations that the proposed team has relevant experience; Central Bank independence emphasized; fiscal prudence and lowering public debt as stated objectives.\n  - Fiscal council: IMF reiterated that establishing an independent fiscal council could increase transparency and strengthen fiscal policy credibility.\n- Venezuela\n  - Severe collapse in economic activity and a humanitarian crisis; IMF has not conducted an Article IV consultation since 2004 due to lack of timely statistics.\n  - IMF teams are piecing together available information to analyze the crisis and consider possible policy programs should a Venezuelan government engage with the international community.\n  - IMF sanctioned Venezuela’s authorities for not providing economic statistics in a timely manner; that process continues.\n  - IMF view: too little reliable information to prescribe specific stabilization strategies such as dollarization at this stage.\n- Caribbean and Andean economies\n  - Some Andean economies benefited from better terms of trade and improved consumer and business confidence.\n  - Caribbean activity recovering, reflecting strong tourism uptake and robust U.S. growth.\n- Nicaragua\n  - Forecasts: decline this year of about four percent in GDP and continued contraction next year of about one percent.\n  - Estimated job losses of about 110.000 so far (data through August).\n  - Observed declines in private consumption, exports, and investment; tourism, transportation, and trade severely affected.\n  - Contagion risks: possible migration spillovers and banking spillovers depending on how the situation evolves.\n- Colombia\n  - IMF commented on a Central Bank strategy to accumulate reserves prudentially; the briefing noted a quoted IMF credit-line context and clarified the Fund is not revising Colombia’s credit line downward.\n  - Quota reference in the discussion: Colombia’s quota was mentioned as being around $1 billion (participant comment)."
    },
    {
      "heading": "Key risks highlighted",
      "content": "- Faster tightening of international financial conditions and abrupt tightening in particular.\n  - These risks disproportionately affect countries with weak fundamentals and large foreign-currency financing needs (Argentina cited as an example).\n- Strengthening trade tensions and heightened policy uncertainty.\n  - Uncertainty has weighed on investment (Mexico cited) and may erode potential trade-diversion gains.\n- Information gaps and data withholding (Venezuela) hamper timely policy analysis and program design.\n- Regional contagion channels from political crises: migration and banking links noted."
    },
    {
      "heading": "Policy recommendations and reform priorities",
      "content": "- Boost productivity and investment by:\n  - Increasing savings.\n  - Reducing misallocation of resources.\n  - Making labor markets more flexible and reducing informality.\n  - Liberalizing trade and fostering regional trade integration.\n  - Improving the business climate.\n  - Strengthening anti-corruption frameworks.\n- Country-specific governance and structural advice:\n  - Brazil: restore fiscal discipline (including pension and public wage considerations), and consider privatization as one element among many, with case-by-case assessment of state-owned enterprises and public assets.\n  - Mexico: maintain and continue implementation of 2013 reforms (energy, education, competition); prioritize governance and anti-corruption measures; consider creating an independent fiscal council to enhance fiscal transparency and credibility.\n  - Nicaragua: monitor for regional spillovers and address collapse in consumption, exports, and investment.\n  - Venezuela: stabilization will require reliable data and a coherent program; IMF cannot specify a detailed strategy without better information."
    },
    {
      "heading": "Recent IMF program operations and engagements",
      "content": "- Barbados: IMF Board approved a program underpinned by significant strengthening of the policy framework and an important debt restructuring.\n- Argentina: staff-level agreement reached on the first review of the program with significant revisions to strengthen financial aspects and the supporting policy framework.\n- Venezuela: IMF continues analytical work using available information and participates in meetings to discuss policy design for recovery should a government engage; IMF Board sanctions remain in place for lack of timely data.\n\nTranscript of October 2018 Western Hemisphere Department Press Briefing — IMF Communications Department\n\n---\n\n\n References\n\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2018/10/13/tr101218-transcript-of-october-2018-western-hemisphere-department-press-briefing"
    }
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    "Published: October 13, 2018",
    "Growth forecast for Latin America and the Caribbean marked down to 1.2 percent in 2018 and 2.2 percent in 2019.",
    "Private investment: after contracting for three years, private investment is estimated to have stopped being a major drag on growth in 2017, is gaining further strength in 2018, and is expected to accelerate in 2019.",
    "Medium-term per capita growth: the region is estimated to grow at about 1.9 percent in per capita terms over the medium term.",
    "Global comparison: question raised in the briefing referenced a world growth rate of 3.7 percent.",
    "Argentina",
    "Brazil",
    "Mexico",
    "Venezuela",
    "Caribbean and Andean economies",
    "Nicaragua",
    "Colombia",
    "Faster tightening of international financial conditions and abrupt tightening in particular.",
    "Strengthening trade tensions and heightened policy uncertainty.",
    "Information gaps and data withholding (Venezuela) hamper timely policy analysis and program design.",
    "Regional contagion channels from political crises: migration and banking links noted.",
    "Boost productivity and investment by:",
    "Country-specific governance and structural advice:",
    "Barbados: IMF Board approved a program underpinned by significant strengthening of the policy framework and an important debt restructuring.",
    "Argentina: staff-level agreement reached on the first review of the program with significant revisions to strengthen financial aspects and the supporting policy framework.",
    "Venezuela: IMF continues analytical work using available information and participates in meetings to discuss policy design for recovery should a government engage; IMF Board sanctions remain in place for lack of timely data.",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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