## Regional Economic Outlook (REO): Western Hemisphere - Northern Spring, Southern Chills, April 2015 _Western Hemisphere, October 7, 2015_ ## Source details **Canonical URL:** [Regional Economic Outlook (REO): Western Hemisphere - Northern Spring, Southern Chills, April 2015](https://www.imf.org/en/publications/reo/wh/issues/2017/01/07/regional-economic-outlook-western-hemisphere7) ## Other formats - [Markdown version](/en/publications/reo/wh/issues/2017/01/07/regional-economic-outlook-western-hemisphere7/index.md) - [Structured JSON version](/en/publications/reo/wh/issues/2017/01/07/regional-economic-outlook-western-hemisphere7/index.json) - [Bundle manifest](/en/publications/reo/wh/issues/2017/01/07/regional-economic-outlook-western-hemisphere7/bundle-manifest.json) ## Bibliographic details - Published: October 7, 2015 - Series: Western Hemisphere --- ### Executive summary and regional outlook - Economies in the Western Hemisphere are generally seeing a slowdown in growth. - The U.S. economy regained momentum after a slow start at the beginning of the year. - Latin America and the Caribbean economic activity continues to decelerate at the regional level. - Stronger U.S. growth should benefit countries with tighter links through trade, remittances, and tourism (Mexico, Central America, and the Caribbean). - Weaker commodity prices for the foreseeable future will continue to hurt South America’s net commodity exporters, lowering national incomes, reducing investment, and worsening fiscal balances. - These developments could impede progress made in recent years in poverty reduction. - Key risks include an abrupt tightening of U.S. interest rates or a further slowdown in China, which may disproportionately affect Latin America. ### Short- and medium-term outlook across subregions - United States and Canada - United States: Following a slow start in early 2015, recovery regains its footing underpinned by resilient consumption and labor markets. - Canada: Continued to lose momentum in the wake of lower oil prices. - Latin America and the Caribbean (LAC) - Economic activity in LAC is undergoing a protracted slowdown, in tandem with weaker underlying fundamentals. - Growth is projected to decline again in 2015, turning negative before rebounding modestly in 2016. - Renewed weakness in commodity prices has further deteriorated the region’s terms of trade, reflected in widening current account deficits, exchange rate depreciation, and weakening investment. - Financial market strains have risen to varying degrees, with retreating capital flows placing additional downward pressure on currencies and testing credibility of existing policy frameworks. - Domestic headwinds owing to country-specific factors are mounting; policy responses depend on country circumstances, including the depth of the downturn and degree of domestic rigidities. - Some countries have already embarked on policy adjustment, while others will need to tighten policies further to address fiscal or external sustainability concerns. - Net commodity importers can use the breathing room from lower commodity prices to deepen fiscal adjustment. - Exchange rate flexibility remains instrumental for external adjustment, while structural reforms are crucial to address low trend growth. ### Key chapters — findings and analyses - Chapter 1: The United States, Canada, and the World: Outlook, Risks, and Policies - Global growth remains modest and uneven. - After a setback in early 2015, global activity rebounded but the growth outlook remains subdued over both short and longer horizons. - Risks to the outlook are tilted to the downside, including possible stagnation in advanced economies coupled with reduced potential growth in emerging markets. - Policies to raise potential remain a priority, with investment and structural reform being crucial. - Chapter 2: Outlook and Policy Challenges for Latin America and the Caribbean - Identifies protracted slowdown and weaker fundamentals across LAC. - Documents consequences of weaker commodity prices: deteriorated terms of trade, wider current account deficits, exchange rate depreciation, weaker investment. - Stresses the importance of country-specific policy responses, fiscal and external sustainability, exchange rate flexibility, and structural reforms. - Chapter 3: To Hike or Not to Hike: Is That an Option for Latin America? Assessing Monetary Policy Autonomy - Quantifies likely impact and risks for domestic financial conditions in Latin America from Federal Reserve normalization. - Explores the extent to which central banks in the region can keep rates aligned with domestic objectives. - Discusses policies that can enhance monetary autonomy. - Chapter 4: Trade Integration in Latin America and the Caribbean: Hype, Hope, and Reality - Finds LAC is less open to trade than most other emerging market regions and many countries are "undertrading" given fundamentals. - Strong performers penetrate large markets, including advanced economies, requiring higher productivity and competitiveness. - LAC stands to benefit from deeper integration into global value chains, though direct short-term trade impact is likely to be small. - Recommends trade agreements focus on raising global competitiveness and avoid creating regionally protected trade blocks. - Chapter 5: Advancing Financial Development in Latin America and the Caribbean - Access to financial institutions has expanded notably in the past decade; LAC compares favorably with other emerging market regions on this dimension. - The region lags peers on broader financial development, especially regarding markets, with substantial heterogeneity across countries. - Financial systems in many LAC countries appear underdeveloped relative to their macroeconomic fundamentals. - Further financial development would likely convey net benefits provided there is adequate regulatory oversight to prevent excesses. ### Policy recommendations and implications - Use exchange rate flexibility to aid external adjustment. - Net commodity importers can deepen fiscal adjustment to take advantage of lower commodity prices. - Countries facing fiscal or external sustainability concerns should tighten policies further as appropriate to country circumstances. - Raise potential growth through investment and structural reforms. - Enhance monetary policy autonomy via appropriate policy tools and frameworks to mitigate spillovers from U.S. monetary normalization. - Pursue trade policies and regional agreements that raise global competitiveness and facilitate integration into global value chains. - Promote financial development with strong regulatory oversight to balance growth benefits and financial stability risks. *Source: Regional Economic Outlook (REO): Western Hemisphere - Northern Spring, Southern Chills, April 2015* --- ## Content in this bundle - **Resumo Analítico** - [Resumo Analítico (Markdown version)](/external/lang/portuguese/pubs/ft/reo/2015/whd/pdf/wreo1015exesump.pdf.md){rel="alternate" type="text/markdown"} - [Resumo Analítico (PDF)](/external/lang/portuguese/pubs/ft/reo/2015/whd/pdf/wreo1015exesump.pdf){rel="external" type="application/pdf"} - **Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; 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October 2015 (Markdown version)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/_wreo1015pdf.pdf.md){rel="alternate" type="text/markdown"} - [Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (PDF)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/_wreo1015pdf.pdf){rel="external" type="application/pdf"} - **Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015** - [Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (Markdown version)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/1015/_abbreviationspdf.pdf.md){rel="alternate" type="text/markdown"} - [Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (PDF)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/1015/_abbreviationspdf.pdf){rel="external" type="application/pdf"} - **Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015** - [Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (Markdown version)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/1015/_chap1pdf.pdf.md){rel="alternate" type="text/markdown"} - [Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (PDF)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/1015/_chap1pdf.pdf){rel="external" type="application/pdf"} - **Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015** - [Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (Markdown version)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/1015/_chap2pdf.pdf.md){rel="alternate" type="text/markdown"} - [Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (PDF)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/1015/_chap2pdf.pdf){rel="external" type="application/pdf"} - **Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; 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October 2015** - [Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (Markdown version)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/1015/_chap5pdf.pdf.md){rel="alternate" type="text/markdown"} - [Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (PDF)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/1015/_chap5pdf.pdf){rel="external" type="application/pdf"} - **Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015** - [Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (Markdown version)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/1015/_exesumpdf.pdf.md){rel="alternate" type="text/markdown"} - [Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (PDF)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/1015/_exesumpdf.pdf){rel="external" type="application/pdf"} - **Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015** - [Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (Markdown version)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/1015/_prefacepdf.pdf.md){rel="alternate" type="text/markdown"} - [Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (PDF)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/1015/_prefacepdf.pdf){rel="external" type="application/pdf"} - **Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015** - [Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (Markdown version)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/1015/_publicationspdf.pdf.md){rel="alternate" type="text/markdown"} - [Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (PDF)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/1015/_publicationspdf.pdf){rel="external" type="application/pdf"} - **Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015** - [Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (Markdown version)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/1015/_referencespdf.pdf.md){rel="alternate" type="text/markdown"} - [Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (PDF)](/-/media/websites/imf/imported-flagship-issues/external/pubs/ft/reo/2015/whd/eng/pdf/1015/_referencespdf.pdf){rel="external" type="application/pdf"} --- ## References - [Sign up to receive free e-mail notices when new series and/or country items are posted on the IMF website.](https://www.imf.org/en/email-subscription/index) - [Modify your profile](https://www.imf.org/en/email-subscription/login) _Source: https://www.imf.org/en/publications/reo/wh/issues/2017/01/07/regional-economic-outlook-western-hemisphere7_