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International Monetary Fund. Western Hemisphere Dept.

Abstract

After slowing in the second half of 2011, global growth is stabilizing. Policy action in Europe and better-than-anticipated U.S. economic performance have eased market strains and revived capital flows to emerging economies, although conditions remain volatile. Downside risks continue to dominate the outlook, given still-fragile public and financial sector balance sheets in many advanced economies. Nevertheless, the global environment under our baseline—easy financing conditions and high commodity prices—remains stimulative for much of Latin America.

International Monetary Fund. Western Hemisphere Dept.

Abstract

Growth in much of Latin America remains solid, although it slowed during the second half of 2011 under the combined effects of policy tightening and global uncertainties. However, many countries are still operating near or above potential, and global financial conditions and commodity prices remain stimulative. In this context, countries should continue to rebuild buffers, to regain fiscal space, preserve hard-won fiscal credibility, and increase monetary policy flexibility. Monetary policy, meanwhile, should shift into neutral and serve as a first line of defense in a downside scenario, complemented by macroprudential policies to address financial excesses.

International Monetary Fund. Western Hemisphere Dept.

Abstract

Financial risks continue to loom over the world economy, raising questions about the potential impact on Latin America. This chapter takes an in-depth look at the question of how global financial shocks affect output in this region and other emerging economies by examining the country features that influence their impact, with a special focus on financial integration and fundamentals linked to external and fiscal sustainability. We find that external sustainability, especially exchange rate flexibility, plays a key role in mitigating the effect of global financial shocks. Moreover, the mitigation or amplification effect of deeper financial integration greatly depends on the flexibility of the exchange rate regime.

International Monetary Fund. Western Hemisphere Dept.

Abstract

Latin America’s economic landscape is characterized by the presence of two large countries (Brazil in the south and Mexico in the north) with the potential to affect smaller neighboring economies significantly. This chapter documents trade linkages between these two large countries and their neighbors, and quantifies the economic impact of shocks stemming from these large economies. Results show important spillovers from Brazil to some of its neighbors, but not others. The analysis also finds that spillovers take place through the transmission of Brazil-specific shocks, as well as through Brazil’s amplification of global shocks. Central America’s trade linkages with Mexico are very weak, suggesting that real spillovers from the latter are small.

International Monetary Fund. Western Hemisphere Dept.

Abstract

Mortgage credit across Latin America is growing very fast, albeit from a low base. Although risks do not seem imminent based on available data, vulnerabilities can rapidly emerge. For this reason, countries in the region should act decisively to close information gaps and strengthen oversight of the housing sector.

Mr. Jeromin Zettelmeyer, Mr. Martin Mühleisen, and Mr. Shaun K. Roache
In a global economy beset by concerns over a growth recession, financial volatility, and rising inflation, countries in the Western Hemisphere have been among the few bright spots in recent years. This has not come as a surprise to those following the significant progress achieved by many countries in recent years, both in macroeconomic management and on the structural and institutional front. Hence, there can be little doubt, as this book argues, that economic and financial linkages between Latin America, the United States, and other important regions of the world economy have undergone profound change.
International Monetary Fund. External Relations Dept.
This paper highlights that since its inception in 1956, the International Finance Corporation (IFC) has invested more than US$1.7 billion in nearly 300 enterprises in 62 developing countries in total projects costing about US$9 billion. The IFC is the affiliate of the World Bank, which has been given the specific task of furthering economic development by encouraging the growth of productive private enterprise in developing countries. The paper underscores that IFC plays an essentially catalytic role in generating investment funds from local and foreign sources.
International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper analyzes Nicaragua’s social security system, which is projected to run out of liquid reserves by 2019, several years earlier than anticipated. To avoid burdening the budget, reforms to the system are urgently needed. A deep actuarial, economic, and operational analysis is needed to design a comprehensive reform program. Such a program must ensure that the defined-benefit, pay-as-you-go system can sustain itself for another generation of workers and that improved health care benefits can be maintained. A politically acceptable, pragmatic solution appears within reach. However, the authorities should act quickly to avoid a costly bailout of the system.
International Monetary Fund. External Relations Dept.
Assemblée annuelle, Communiqué du CMFI, Principes pour fonds souverains, Crise financière mondiale, Comptabilité à la juste valeur, Tensions financières et ralentissements, Crise des subprimes, Où en sont Fannie et Freddie?, Analyse des taux de change, Centres régionaux d'assistance technique, Assistance technique : fonds fiduciaires, Perspectives économiques africaines, Protection contre les chocs exogènes, L'actualité en bref.
International Monetary Fund. External Relations Dept.
Annual Meetings, IMFC Communiqué, Global Financial Stability Report, Sovereign Wealth Fund Principles, Global Financial Crisis, Fair Value Accounting, Financial Stress and Downturns, Subprime Crisis, What Next for Fannie Mae, Freddie Mac?, Exchange Rate Analysis, IMF Technical Assistance Centers, TA Trust Funds, African Economic Outlook, Exogenous Shocks Facility, News Briefs.