WASHINGTON, D.C., USA - RECENT assessments by the International Monetary Fund (IMF) indicate that economic woes in Latin America and the Caribbean (LAC) “will hit bottom in the first part of 2009 and will begin to grow in the second part of the year”.
According to the IMF, the global economic crisis has had effects upon the LAC that are “severe and wide-ranging, but the region is now better positioned to weather the current downturn and is expected to emerge from the financial crisis earlier than the advanced economies”.
While the IMF has predicted that “advanced economies” are not likely to see a move toward positive growth until at least mid-2010, the LAC region would cease contracting in late 2009 and is predicted to experience a growth rate of 1.6 percent in 2010.
“There is no doubt that the region is being hurt by the global turmoil, but the region has a much higher level of preparedness today in terms of stronger public finances and financial sectors, and policies that help cushion external shocks,” said Nicolas Eyzaguirre, Director of the IMF’s Western Hemisphere Department.
Eyzaguirre said that the LAC’s preparation is evident when the region’s position today is compared to where it has been in the past during economically challenging times.
“Looking back at previous global downturns, the LAC region would normally trail the world economy by one or two percentage points. Now, however, we expect the region to keep up with world growth, which, in relative terms, is a positive development.”
The IMF release said that in spite of the region losing significant income from industry, tourism and remittances, the economies have been able to limit losses, thanks to liquidity and lowered interest rates from central banks, restructuring debt and “anchoring inflation”.
“The lesson emerging from Latin America [and the Caribbean] is that stronger fundamentals pay important dividends when external conditions deteriorate,” Mr. Eyzaguirre stated in the IMF release.
