## Transcript of Western Hemisphere Department Press Briefing _IMF News, January 25, 2019_ ## Source details **Canonical URL:** [Transcript of Western Hemisphere Department Press Briefing](https://www.imf.org/en/news/articles/2019/01/28/tr012519-transcript-of-western-hemisphere-department-press-briefing) ## Other formats - [Markdown version](/en/news/articles/2019/01/28/tr012519-transcript-of-western-hemisphere-department-press-briefing/index.md) - [Structured JSON version](/en/news/articles/2019/01/28/tr012519-transcript-of-western-hemisphere-department-press-briefing/index.json) - [Bundle manifest](/en/news/articles/2019/01/28/tr012519-transcript-of-western-hemisphere-department-press-briefing/bundle-manifest.json) ## Bibliographic details - Published: January 25, 2019 --- ### Regional growth outlook and drivers - IMF projects regional growth of 2 por ciento in 2019 and 2.5 en 2020 for América Latina. - Excluding Venezuela, the regional average is 2.3 por ciento in 2019. - Acceleration in 2019 is driven mainly by: - A rebound in Brazil. - A substantially smaller contraction in Argentina in 2019 compared with 2018. - Centroamérica is expected to grow at "alrededor del 4 por ciento, 3.8 por ciento". - Caribbean economies are expected to accelerate toward growth rates "más cercanas al 2%". - Risks slowing the regional acceleration: - Weakening global activity. - Increased uncertainty about economic policy implementation in countries with new administrations. - Intensification of trade tensions. - Tightening of global financial conditions and episodes of market volatility. ### Key country assessments and near-term projections - Argentina - 2018 contraction: 2.8 por ciento. - Projected 2019 contraction: 1.7 por ciento. - IMF expects Argentina to begin exhibiting quarterly growth starting in Q2 2019, supported by: - Real wage increases. - Falling interest rates. - Recent stability in financial variables. - Inflation and expectations: - Market expectations around "28 por ciento, 27 por ciento" for 2019. - Latest Staff Report projection remains at "20.2 por ciento" pending revision after the program's third review (team visit to Buenos Aires in the second week of February). - IMF notes a likely upward revision above "20 por ciento" given high end-2018 inflation. - IMF expects a reduction of inflation by "en los dos dígitos" in 2019 and stabilization toward single-digit inflation in the medium term if fiscal and monetary targets are met. - Political uncertainty around elections could affect investment and the medium‑term policy framework; a political shift could materially affect program outcomes. - Venezuela - 2018 hyperinflation rate was "cercana a 2 millones por ciento". - IMF’s scenario for 2019 hyperinflation: "10 millones por ciento" if no policy changes occur. - 2018 contraction was "18 porciento". - IMF expects continued double-digit contraction in 2019 and cumulative contraction since 2013 to be "mayor al 50 por ciento" (economy today is "menos de la mitad" of 2013). - Continued acceleration of hyperinflation, deepening humanitarian crisis, and intensified migration flows are expected absent policy change. - IMF monitoring of official data delivery and member states' positioning on recognition is ongoing. - Brazil - IMF projections assume compliance with the constitutional expenditure ceiling. - Implicit in forecasts is that either a social security reform or other large entitlement reform will be enacted to help comply with the ceiling. - IMF views social security reform as "one of the key elements" to place public finances on a sustainable path and to enable higher potential growth via improved fiscal sustainability and a more supportive environment for investment. - Mexico - IMF notes market perception is favorable regarding fiscal objectives, the budget, and macroeconomic management. - Theft of fuel is estimated at "alrededor de 3000 millones de dólares anuales". - IMF supports the objective of eliminating fuel theft because it: - Improves PEMEX finances. - Supports public finance consolidation. - Reinforces the rule of law. - IMF cautions that design of anti-theft measures should minimize adverse collateral effects on the rest of the economy. - Chile - IMF endorses structural reforms that: - Maintain fiscal consolidation toward a primary balance over the medium term and stabilize the debt/GDP ratio. - Reduce distortions to investment (tax reform). - Strengthen pension system viability (pension reform). - Reduce regulatory burdens and promote investment, including adoption of information technologies. - Quantitative effects on potential growth will be assessed in the next Article IV consultation. - Peru, Colombia, other Pacific Alliance members - Peru: projected growth of "3.8 por ciento". - Colombia and Chile: expected growth "alrededor de 3.4 por ciento" (Chile decelerating slightly, Colombia accelerating). - These economies have largely absorbed earlier terms-of-trade shocks and are on a stable growth path, with growth slightly below potential. - Smaller economies (Uruguay, Paraguay) - Have shown important resilience and strong economic management, limiting contagion from regional volatility. ### Financial conditions and spillovers from advanced economies - US monetary policy and the Fed - IMF considers a data-dependent, cautious Fed approach appropriate as the US nears neutral interest rates. - A more cautious Fed is broadly positive for Latin America through laxer global financial conditions, but: - Countries with strong real ties to the US (e.g., Mexico) may be more affected by weaker US real activity. - Commodity-exporting countries in the Southern Cone may benefit more from eased financial conditions. - Global risks emphasized: - Trade tensions. - Episodes of volatility and tightening in financial conditions like those seen at end-2018 could spill over to the region. ### IMF engagement, conditionality, and technical advice - Ecuador - Ecuador has not formally requested a program from the IMF. - Over the last 6–8 months, the IMF has engaged in technical consultations with Ecuador's Ministry of Finance on macroeconomic projections and policy advice. - IMF views the Moreno administration's announced plan as moving in the right direction to restore macroeconomic balance while striving to protect social spending and vulnerable groups. - The IMF stands ready to negotiate a financial support program promptly if Ecuador requests one. - IMF program approach and monitoring - For countries with programs (e.g., Argentina), IMF assessments stress adherence to fiscal and monetary targets as anchors of credibility. - For Venezuela, IMF has not revised full macro forecasts outside the WEO publication timetable due to severe data and policy uncertainty; a full update would come in spring with the World Economic Outlook. - IMF will closely monitor Brazil's announced reform agenda, especially social security reform, for its importance to fiscal sustainability and capital market development. ### Policy implications and recommendations (summarized) - Maintain fiscal consolidation where needed to stabilize debt dynamics (Brazil: comply with expenditure ceiling; Argentina: meet program fiscal targets). - Pursue structural reforms to boost investment and medium-term potential growth: - Brazil: social security and entitlement reforms, regulatory and trade-opening measures. - Chile: tax, pension, and regulatory reforms plus technology adoption. - Continue consistent and credible monetary policies to reduce inflation and anchor expectations (Argentina: continued monetary consistency expected to lower inflation trends). - Design measures to combat illicit activities (e.g., fuel theft in Mexico) to achieve objectives while minimizing collateral economic impacts. - Prepare for global risk scenarios (trade tensions and financial tightening) by maintaining policy buffers and clear communications. ### Exact key numerical figures cited in the briefing - Regional growth projections: "2 por ciento" in 2019 and "2.5" en 2020. - Regional average excluding Venezuela: "2.3 por ciento". - Centroamérica growth: "alrededor del 4 por ciento, 3.8 por ciento". - Caribbean growth: toward "más cercanas al 2%". - Argentina: - 2018 contraction: "2.8 por ciento". - 2019 projected contraction: "1.7 por ciento". - Staff Report inflation projection (previous): "20.2 por ciento". - Market inflation expectations cited: "28 por ciento, 27 por ciento". - Venezuela: - 2018 hyperinflation: "cercana a 2 millones por ciento". - 2019 hyperinflation scenario: "10 millones por ciento" (if no policy change). - 2018 contraction: "18 porciento". - Cumulative contraction since 2013: "mayor al 50 por ciento". - Estimated annual fuel theft in Mexico: "alrededor de 3000 millones de dólares anuales". - Peru projected growth: "3.8 por ciento". - Colombia and Chile projected growth: "alrededor de 3.4 por ciento". *Transcript of Western Hemisphere Department Press Briefing, January 25, 2019 — Alejandro Werner, Director, Western Hemisphere Department, IMF; IMF Communications Department.* --- ## References - [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) - [República Bolivariana de Venezuela and the IMF](http://www.imf.org/external/country/VEN/index.htm) - [Uruguay and the IMF](http://www.imf.org/external/country/URY/index.htm) - [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) _Source: https://www.imf.org/en/news/articles/2019/01/28/tr012519-transcript-of-western-hemisphere-department-press-briefing_