Output growth in Latin America firmed up toward the end of 2012, after moderating earlier in the year, particularly in some of the region’s largest economies. In most economies, domestic demand remained robust and external current account deficits widened further. Growth is set to pick up further in 2013, supported by stronger external demand. In the context of closed output gaps and relatively easy financing conditions, key policy priorities are strengthening public finances and protecting financial sector stability. In the Caribbean, growth continues to be held back by high debt levels and weak competitiveness.
Overview
Real GDP growth in Latin America and the Caribbean (LAC) moderated to about 3 percent in 2012, down from 4½ percent the previous year. The deceleration was particularly pronounced in some of the region’s largest economies (Figure 2.1). In Brazil, private investment declined sharply in the early part of 2012, partly reflecting weak business confidence and policy uncertainty, but has started to grow again more recently. In Argentina, widespread exchange and import controls weighed on confidence and activity. Growth remained strong in the rest of Latin America, in most cases with robust domestic demand helping to offset to some extent the slowdown in exports. Meanwhile, in much of the Caribbean, growth remained constrained by high debt levels and slow tourism activity.
Growth remains solid in much of Latin America, driven by strong domestic demand, and output gaps are closed.
Financial markets in the region have recovered from their mid-2012 lows as policy actions in advanced economies helped boost investors’ confidence. Strong portfolio inflows to the region led to further reduction in spreads and put upward pressure on local currencies (Figure 2.2). Sovereigns and corporations, including those with limited access to international markets in the past, have been able to place bonds at record low rates. Meanwhile, equity price-earnings ratios have again risen above historical averages in some countries.
Strong capital flows to the region have boosted asset prices.
Sources: Bloomberg, L.P.; Haver Analytics; IMF, International Financial Statistics; and IMF staff calculations.1 New investments less redemptions in mutual and exchange traded funds (ETFs) that track returns in LA6 bond and equity markets.2 Simple average of Chile, Colombia, Peru, and Uruguay except for equity prices where there is no data for Uruguay.Looking ahead, global financial conditions are expected to remain favorable in the near term, and commodity prices are projected to remain relatively high (see Chapter 1). Under IMF staff baseline, growth in Latin America is projected to strengthen to 3½ percent in 2013, with activity in Brazil firming up. Growth in the Caribbean also should gather some strength, in line with the projected gradual pickup in external demand.
External risks to the near-term outlook have receded. Policy actions in the euro area and the United States have removed immediate threats to global growth and financial stability. Nonetheless, in Europe, the risk that adjustment fatigue stalls progress on the implementation of policy commitments remains. So far, deleveraging by European banks has had limited effects on the region’s credit markets (see Box 2.1), but as long as the repair of bank balance sheets in Europe is incomplete, further deleveraging remains a risk. In the United States, the short-term risks have become more balanced, although failure to replace the automatic fiscal spending cuts (“the sequester”) with more backloaded measures before the start of the next fiscal year (in October) would affect growth in late 2013 and beyond. Lower U.S. growth would have a negative impact on the region, particularly in Mexico and Central America, where links through trade and remittances are the strongest.
Medium-term risks remain tilted to the downside. The key risk is a reversal of the favorable tailwinds of easy financing conditions and strong commodity prices that have prevailed since 2010. The region would be particularly affected if a sharp slowdown in China or other key economies triggers a drop in commodity prices. Model simulations of a risk scenario of a synchronized 10 percent decline in investment in the four largest emerging markets (the BRICs) suggest that growth in Latin America would decline by about 1 percentage point relative to the baseline (Figure 2.3). Growth could be up to 2 percentage points lower if the investment shock is accompanied by capital outflows.1 Another risk is that lack of progress in addressing the medium-term fiscal challenges in key advanced economies leads to a sharp increase in sovereign and corporate risk premiums, with negative impact on global growth.
Growth is projected to reach 3½ percent in 2013 as activity in Brazil rebounds. Medium-term risks remain tilted to the downside.
Domestically, the risk of a deterioration of external and financial sector balance sheets has increased in some countries. Current account balances have weakened in recent years, and asset prices are on the rise. Credit growth has moderated, but remains high in a number of countries. Although financial stability issues do not pose an immediate concern, policies need to focus on mitigating potential balance sheet vulnerabilities.
Policy Challenges
Countries in Latin America should take advantage of the current favorable economic conditions to build a strong foundation for sustained growth in the future. Policy priorities include building stronger fiscal buffers, improving policy frameworks, and pressing ahead with structural reforms to increase productivity and potential growth. As global investors allocate a larger share of their portfolio to emerging markets, countries in the region need to continue strengthening prudential regulation to prevent a buildup of financial vulnerabilities.
IMF staff analysis suggests that potential growth rates in many countries are lower than those experienced during the recent cyclical upturn (see Chapter 3). Thus, it would be important for policymakers to calibrate macroeconomic policies based on a realistic assessment of the supply potential of the economy.
Financially Integrated Economies2
Developments
With the recovery from the 2008–09 global economic crisis completed, output growth in most financially integrated economies moderated toward potential in 2012, although heterogeneity among countries increased.
-
Growth decelerated sharply in Brazil, despite significant monetary and fiscal policy stimulus. High unit labor costs, infrastructure bottlenecks, and domestic policy uncertainty are likely to have weighed on business confidence and private investment. Recent indicators point to strengthening activity, and investment growth turned positive in the last quarter of 2012.
-
The slowdown in growth in the other economies was more gradual, and reflected mainly earlier policy tightening and softer external demand. Nonetheless, domestic demand remained robust. Consumption continued to be supported by rising labor income and easy credit conditions. In Chile and Peru, private investment also made a strong contribution to growth, partly reflecting large foreign direct investments in the mining sector. Following dynamic growth in early 2012, economic activity in Mexico moderated in the latter part of the year, in line with the slowdown in U.S. industrial production. Growth in Colombia also slowed in the second half of 2012, prompting some easing of macroeconomic policies.
Labor markets remained tight in all countries. Employment creation continued to exceed labor force growth, bringing unemployment rates to near record lows in most economies. Real wage growth was also strong, exceeding labor productivity growth in some cases (Brazil).
Inflation pressures remained contained, with some exceptions. Both core and headline inflation rates fell since mid-2012 in Chile, Colombia, and Peru, driven by moderation of food and energy prices and pass-through effects from currency appreciation. In these countries, headline inflation is close to the target (or below), and inflation expectations remain well anchored. In Mexico, inflation expectations have been relatively stable at a level somewhat above the mid-point of the inflation target. In contrast, inflation remains elevated in Brazil and Uruguay (Figure 2.4). In Brazil, inflation has risen since mid-2012, reflecting strong wage growth, tight capacity constraints in some sectors, and past currency depreciation. In Uruguay, higher food prices (driven by local weather-related shocks) and widespread wage indexation have played a role in keeping inflation well above the target.
Domestic demand remained strong. Inflation rates are close to the target in most countries despite tight labor markets.
The external current account deficits of these countries widened further despite strong terms of trade. Current account deficits rose to an average of 2.8 percent of GDP in 2012 (from 2 percent of GDP in 2011) as domestic demand growth continued to exceed output growth. In most countries, the deterioration was driven largely by buoyant private demand, partly offset by a modest increase in public savings (Figure 2.5).
Strong domestic demand led to further widening of current account deficits.
Capital inflows remained robust, although outflows have also increased, leaving net financial flows broadly at the same level as in 2011 (Figure 2.6). Foreign direct investment (in the commodity, finance, and retail sectors) continued to account for a large share of inflows, though portfolio inflows also picked up in the second half of the year (particularly in Mexico), putting upward pressure on local currencies and prompting a step up in the pace of reserve accumulation in some cases. One exception was Brazil, where lower interest rates, weaker growth, and the earlier tightening of capital flow measures led to deceleration of inflows in 2012.3
Strong capital inflows put pressure on local currencies in most countries and prompted a step up in reserve accumulation.
Bank credit growth remained strong, at more than 10 percent in real terms, although the pace of growth has moderated in recent months (Figure 2.7). Corporate bond issuance also picked up, with an increasing number of firms issuing for the first time. Firms in the region are increasingly able to issue bonds at much lower interest rates and at longer maturities than previously. Analysis of corporate balance sheets in the region suggests that they remain generally healthy, although debt-to-asset ratios have increased in some sectors such as construction, manufacturing, and retail trade (see Gonzalez-Miranda, 2012).
Credit growth remains strong, and financial sector indicators appear healthy.
House prices in major metropolitan areas in the region have increased rapidly in recent years, especially in Brazil and Peru. Household leverage is rising in many countries, although it remains relatively low compared with other emerging economies.
Outlook and Policy Priorities
Growth in the financially integrated economies is projected to be close to potential in 2013. In Brazil, output growth is expected to recover to 3 percent in 2013 (from 0.9 percent in 2012), reflecting the lagged impact of domestic policy easing and measures targeted at boosting private investment.
If the fiscal stance is relaxed or financing conditions ease further, domestic demand in these countries may grow faster than projected. With tight capacity constraints, this would lead to further widening of current account deficits and upward pressure on domestic prices.
In view of these risks, policy efforts should focus on preventing a buildup of macroeconomic and financial vulnerabilities. A key policy priority is to step up the pace of fiscal consolidation. Public debt declined rapidly in the years prior to the 2008 financial crisis, but regaining fiscal space since then has proved challenging, despite the boost to fiscal revenues from high commodity prices and strong growth. The ratio of public expenditure to GDP has remained high in most countries, and growth in public spending accelerated further in 2012. The 2013 fiscal budget implies a mild easing of the fiscal stance in Chile, Colombia, and Peru.
More prudent fiscal policy would help ease pressure on domestic capacity constraints and mitigate the widening of current account deficits. Stronger public balance sheets would also help shield these economies from adverse external shocks in the future (see Chapter 4), and strengthen their ability to deal with long-term challenges related to population aging.
Monetary policy should remain flexible and respond to changing economic circumstances. Countries with relatively high inflation (Brazil and Uruguay), or with strong pressures on capacity constraints, may need to tighten policies to help maintain macroeconomic stability (Figure 2.8). Countries with well-anchored inflation expectations can lower rates below neutral to support activity in the event of a slowdown.
Fiscal stance eased in some countries in 2012. Monetary policy remains highly accommodative in Brazil and Uruguay.
Exchange rate flexibility should continue to be used to discourage speculative capital flows (see Box 2.2). Stepping up the pace of reserve accumulation could be considered in countries where real exchange rates are close to the upper limit of the range consistent with fundamentals. In addition, further tightening of prudential policies could help limit the buildup of financial sector vulnerabilities (see below). Capital flow restrictions aimed at changing the volume or composition of inflows are also an option, although the effectiveness of these measures is limited and frequent readjustments are necessary to avoid circumvention.
Strengthening financial sector regulation and supervision remains critical to protect the stability of the banking system and prevent financial excesses. Banks in these countries have high capital and liquidity ratios, low nonperforming loans, and high return on assets. However, strong bank financial indicators are not unusual at this stage of the cycle and could mask rising vulnerabilities. Increasing leverage in cyclically sensitive sectors such as construction and retail should be monitored carefully. Prudential measures (such as forward-looking provisioning requirements, stricter loan-to-value ratios, higher capital requirements, and limits on sectoral exposure) would help mitigate risks. In fact, a number of countries (Peru, Colombia, and Uruguay) have appropriately tightened prudential policies in recent months (see Table 2.4). Additional prudential measures may be required in some countries to keep credit growth and associated vulnerabilities in check.
Western Hemisphere: Main Economic Indicators1
Regional aggregates are PPP-GDP weighted averages, unless otherwise noted.
End-of-period (December) rates. These will generally differ from period average inflation rates reported in the IMF’s World Economic Outlook, although both are based on identical underlying projections.
Data for Argentina are officially reported data. The IMF has, however, issued a declaration of censure and called on Argentina to adopt remedial measures to address the quality of the official GDP and CPI-GBA data. Alternative data sources have shown significantly lower real growth than the official data since 2008, and higher inflation rates than the official data since 2007. In this context, the IMF is also using alternative estimates of GDP growth for the surveillance of macroeconomic developments in Argentina. Note that the data from alternative statistical agencies may also have methodological shortcomings.
Fiscal year data.
Simple average for Brazil, Chile, Colombia, Mexico, Peru, and Uruguay.
Simple average for Argentina, Bolivia, Ecuador, Paraguay, and Venezuela.
Simple average of Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.
Simple average of The Bahamas, Barbados, Jamaica, and ECCU member states.
Simple average of Belize, Guyana, Suriname, and Trinidad and Tobago.
Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines, as well as Anguilla and Montserrat, which are not IMF members.
Western Hemisphere: Main Economic Indicators1
| Output Growth (Percent) |
Inflation2 (End of period, percent) |
External Current Account Balance (Percent of GDP) |
|||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Projected | Projected | Projected | |||||||||||||||
| 2010 | 2011 | 2012 | 2013 | 2014 | 2010 | 2011 | 2012 | 2013 | 2014 | 2010 | 2011 | 2012 | 2013 | 2014 | |||
| North America | |||||||||||||||||
| Canada | 3.2 | 2.6 | 1.8 | 1.5 | 2.4 | 2.2 | 2.7 | 0.9 | 1.9 | 1.9 | −3.6 | −3.0 | −3.7 | −3.5 | −3.4 | ||
| Mexico | 5.3 | 3.9 | 3.9 | 3.4 | 3.4 | 4.4 | 3.8 | 4.0 | 3.6 | 3.3 | −0.2 | −0.8 | −0.8 | −1.0 | −1.0 | ||
| United States | 2.4 | 1.8 | 2.2 | 1.9 | 3.0 | 1.7 | 3.1 | 1.8 | 1.7 | 1.8 | −3.0 | −3.1 | −3.0 | −2.9 | −3.0 | ||
| South America | |||||||||||||||||
| Argentina3 | 9.2 | 8.9 | 1.9 | 2.8 | 3.5 | 10.9 | 9.5 | 10.8 | 10.1 | 10.1 | 0.6 | −0.4 | 0.1 | −0.1 | −0.5 | ||
| Bolivia | 4.1 | 5.2 | 5.2 | 4.8 | 5.0 | 7.2 | 6.9 | 4.5 | 4.4 | 4.2 | 4.9 | 2.2 | 7.5 | 4.8 | 3.5 | ||
| Brazil | 7.5 | 2.7 | 0.9 | 3.0 | 4.0 | 5.9 | 6.5 | 5.8 | 5.5 | 4.5 | −2.2 | −2.1 | −2.3 | −2.4 | −3.2 | ||
| Chile | 5.8 | 5.9 | 5.5 | 4.9 | 4.6 | 3.0 | 4.4 | 1.5 | 3.0 | 3.0 | 1.5 | −1.3 | −3.5 | −4.0 | −3.6 | ||
| Colombia | 4.0 | 6.6 | 4.0 | 4.1 | 4.5 | 3.2 | 3.7 | 2.4 | 2.4 | 3.0 | −3.1 | −3.0 | −3.4 | −3.4 | −2.9 | ||
| Ecuador | 3.3 | 8.0 | 5.0 | 4.4 | 3.9 | 3.3 | 5.4 | 4.2 | 6.1 | 2.1 | −2.6 | −0.2 | −0.5 | −1.3 | −1.5 | ||
| Guyana | 4.4 | 5.4 | 3.3 | 5.5 | 6.0 | 4.5 | 3.3 | 4.6 | 6.0 | 5.5 | −9.6 | −13.4 | −13.2 | −14.1 | −20.0 | ||
| Paraguay | 13.1 | 4.3 | −1.2 | 11.0 | 4.6 | 7.2 | 4.9 | 4.0 | 5.0 | 5.0 | −3.1 | −1.1 | −2.0 | −2.4 | −2.9 | ||
| Peru | 8.8 | 6.9 | 6.3 | 6.3 | 6.1 | 2.1 | 4.7 | 2.6 | 2.1 | 2.0 | −2.5 | −1.9 | −3.6 | −3.5 | −3.4 | ||
| Suriname | 4.1 | 4.7 | 4.5 | 4.5 | 4.5 | 10.3 | 15.3 | 4.1 | 4.5 | 4.0 | 6.4 | 5.8 | 6.4 | 3.9 | 1.8 | ||
| Uruguay | 8.9 | 5.7 | 3.8 | 3.8 | 4.0 | 6.9 | 8.6 | 7.5 | 7.8 | 7.0 | −1.9 | −2.8 | −3.4 | −2.9 | −2.5 | ||
| Venezuela | −1.5 | 4.2 | 5.5 | 0.1 | 2.3 | 27.2 | 27.6 | 20.1 | 28.0 | 27.3 | 2.2 | 7.7 | 2.9 | 6.2 | 7.7 | ||
| Central America | |||||||||||||||||
| Belize | 2.7 | 1.9 | 5.3 | 2.5 | 2.5 | 0.0 | 2.5 | 0.6 | 2.0 | 2.0 | −2.8 | −1.1 | −2.6 | −3.2 | −3.6 | ||
| Costa Rica | 4.7 | 4.2 | 5.0 | 4.2 | 4.4 | 5.8 | 4.7 | 4.6 | 5.0 | 5.0 | −3.5 | −5.3 | −5.3 | −5.5 | −5.4 | ||
| El Salvador | 1.4 | 2.0 | 1.6 | 1.6 | 1.6 | 2.1 | 5.1 | 0.8 | 2.3 | 2.6 | −2.7 | −4.6 | −5.1 | −4.9 | −4.5 | ||
| Guatemala | 2.9 | 4.1 | 3.0 | 3.3 | 3.4 | 5.4 | 6.2 | 3.4 | 4.5 | 4.8 | −1.5 | −3.6 | −3.5 | −3.7 | −3.6 | ||
| Honduras | 3.7 | 3.7 | 3.3 | 3.3 | 3.0 | 6.5 | 5.6 | 5.4 | 5.9 | 5.7 | −5.3 | −8.5 | −9.9 | −11.2 | −8.7 | ||
| Nicaragua | 3.6 | 5.4 | 5.2 | 4.0 | 4.0 | 5.5 | 8.1 | 7.2 | 7.7 | 7.1 | −11.0 | −13.7 | −15.8 | −13.7 | −13.3 | ||
| Panama | 7.5 | 10.8 | 10.7 | 9.0 | 7.2 | 4.9 | 6.3 | 4.6 | 4.8 | 4.5 | −10.2 | −12.2 | −9.0 | −8.9 | −8.7 | ||
| The Caribbean | |||||||||||||||||
| Antigua and Barbuda | −8.5 | −3.0 | 1.6 | 1.7 | 3.2 | 2.9 | 4.0 | 1.8 | 3.1 | 3.1 | −14.7 | −10.8 | −12.8 | −13.1 | −14.0 | ||
| The Bahamas | 0.2 | 1.6 | 2.5 | 2.7 | 2.5 | 1.5 | 3.2 | 2.3 | 2.0 | 2.0 | −10.5 | −14.0 | −14.1 | −13.7 | −12.8 | ||
| Barbados | 0.2 | 0.6 | 0.0 | 0.5 | 1.0 | 6.6 | 9.5 | 1.2 | −0.3 | −0.7 | −8.2 | −8.7 | −5.7 | −6.1 | −5.8 | ||
| Dominica | 0.7 | 1.9 | 0.4 | 1.3 | 1.5 | 0.1 | 2.0 | 3.6 | 1.5 | 1.6 | −16.2 | −12.8 | −13.5 | −13.8 | −13.9 | ||
| Dominican Republic | 7.8 | 4.5 | 3.9 | 2.2 | 3.4 | 6.2 | 7.8 | 3.9 | 5.0 | 4.5 | −8.4 | −7.9 | −7.2 | −4.6 | −3.3 | ||
| Grenada | −0.4 | 1.0 | −0.8 | 0.5 | 1.0 | 4.2 | 3.5 | 1.8 | 2.6 | 2.6 | −24.1 | −23.3 | −23.0 | −23.4 | −23.4 | ||
| Haiti4 | −5.4 | 5.6 | 2.8 | 6.5 | 6.3 | 4.7 | 10.4 | 6.5 | 5.0 | 4.5 | −12.5 | −4.6 | −4.0 | −5.6 | −5.3 | ||
| Jamaica | −1.4 | 1.5 | 0.1 | 0.5 | 1.2 | 11.8 | 6.0 | 7.4 | 8.3 | 6.2 | −8.7 | −12.6 | −11.9 | −10.3 | −8.7 | ||
| St. Kitts and Nevis | 0.0 | −1.9 | −0.9 | 1.9 | 3.2 | 5.2 | 2.9 | 0.3 | 3.4 | 2.5 | −22.4 | −15.6 | −13.5 | −15.9 | −17.2 | ||
| St. Lucia | 0.2 | 1.4 | −0.4 | 1.1 | 2.2 | 4.2 | 4.8 | 6.2 | 2.4 | 2.8 | −16.9 | −20.1 | −19.1 | −18.2 | −17.2 | ||
| St. Vincent and the Grenadines | −2.3 | 0.4 | 0.5 | 1.0 | 2.0 | 0.9 | 4.7 | 0.8 | 2.4 | 2.5 | −30.6 | −28.8 | −27.9 | −26.8 | −25.2 | ||
| Trinidad and Tobago | 0.2 | −2.6 | 0.4 | 2.0 | 2.5 | 13.4 | 5.3 | 7.2 | 4.0 | 4.0 | 20.3 | 11.1 | 12.1 | 11.0 | 11.2 | ||
| Memorandum: | |||||||||||||||||
| Latin America and the Caribbean (LAC) 1 | 6.1 | 4.6 | 3.0 | 3.4 | 3.9 | 6.6 | 6.8 | 5.9 | 6.1 | 5.5 | -1.2 | -1.3 | -1.7 | -1.7 | -2.0 | ||
| Financially Integrated LAC5 | 6.7 | 5.3 | 4.1 | 4.3 | 4.5 | 4.2 | 5.3 | 4.0 | 4.1 | 3.8 | −1.4 | −2.0 | −2.8 | −2.9 | −2.8 | ||
| Other Commodity Exporters6 | 5.6 | 6.1 | 3.3 | 4.6 | 3.8 | 11.2 | 10.9 | 8.7 | 10.7 | 9.7 | 0.4 | 1.6 | 1.6 | 1.4 | 1.2 | ||
| CAPDR7 | 4.0 | 4.0 | 3.7 | 3.1 | 3.3 | 5.3 | 6.2 | 4.2 | 5.1 | 4.9 | −5.4 | −7.3 | −7.8 | −7.3 | −6.5 | ||
| Caribbean | |||||||||||||||||
| Tourism dependent8 | −1.2 | 0.4 | 0.3 | 1.2 | 2.0 | 4.1 | 4.5 | 2.8 | 2.8 | 2.5 | −16.9 | −16.3 | −15.7 | −15.7 | −15.3 | ||
| Commodity exporters9 | 2.9 | 2.4 | 3.4 | 3.6 | 3.9 | 7.1 | 6.6 | 4.1 | 4.1 | 3.9 | 3.6 | 0.6 | 0.7 | −0.6 | −2.6 | ||
| Eastern Caribbean Currency Union10 | −2.6 | −0.5 | 0.0 | 1.2 | 2.2 | 3.1 | 4.1 | 3.0 | 2.4 | 2.5 | −20.1 | −18.0 | −17.8 | −18.3 | −18.0 | ||
Regional aggregates are PPP-GDP weighted averages, unless otherwise noted.
End-of-period (December) rates. These will generally differ from period average inflation rates reported in the IMF’s World Economic Outlook, although both are based on identical underlying projections.
Data for Argentina are officially reported data. The IMF has, however, issued a declaration of censure and called on Argentina to adopt remedial measures to address the quality of the official GDP and CPI-GBA data. Alternative data sources have shown significantly lower real growth than the official data since 2008, and higher inflation rates than the official data since 2007. In this context, the IMF is also using alternative estimates of GDP growth for the surveillance of macroeconomic developments in Argentina. Note that the data from alternative statistical agencies may also have methodological shortcomings.
Fiscal year data.
Simple average for Brazil, Chile, Colombia, Mexico, Peru, and Uruguay.
Simple average for Argentina, Bolivia, Ecuador, Paraguay, and Venezuela.
Simple average of Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.
Simple average of The Bahamas, Barbados, Jamaica, and ECCU member states.
Simple average of Belize, Guyana, Suriname, and Trinidad and Tobago.
Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines, as well as Anguilla and Montserrat, which are not IMF members.
Western Hemisphere: Main Economic Indicators1
| Output Growth (Percent) |
Inflation2 (End of period, percent) |
External Current Account Balance (Percent of GDP) |
|||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Projected | Projected | Projected | |||||||||||||||
| 2010 | 2011 | 2012 | 2013 | 2014 | 2010 | 2011 | 2012 | 2013 | 2014 | 2010 | 2011 | 2012 | 2013 | 2014 | |||
| North America | |||||||||||||||||
| Canada | 3.2 | 2.6 | 1.8 | 1.5 | 2.4 | 2.2 | 2.7 | 0.9 | 1.9 | 1.9 | −3.6 | −3.0 | −3.7 | −3.5 | −3.4 | ||
| Mexico | 5.3 | 3.9 | 3.9 | 3.4 | 3.4 | 4.4 | 3.8 | 4.0 | 3.6 | 3.3 | −0.2 | −0.8 | −0.8 | −1.0 | −1.0 | ||
| United States | 2.4 | 1.8 | 2.2 | 1.9 | 3.0 | 1.7 | 3.1 | 1.8 | 1.7 | 1.8 | −3.0 | −3.1 | −3.0 | −2.9 | −3.0 | ||
| South America | |||||||||||||||||
| Argentina3 | 9.2 | 8.9 | 1.9 | 2.8 | 3.5 | 10.9 | 9.5 | 10.8 | 10.1 | 10.1 | 0.6 | −0.4 | 0.1 | −0.1 | −0.5 | ||
| Bolivia | 4.1 | 5.2 | 5.2 | 4.8 | 5.0 | 7.2 | 6.9 | 4.5 | 4.4 | 4.2 | 4.9 | 2.2 | 7.5 | 4.8 | 3.5 | ||
| Brazil | 7.5 | 2.7 | 0.9 | 3.0 | 4.0 | 5.9 | 6.5 | 5.8 | 5.5 | 4.5 | −2.2 | −2.1 | −2.3 | −2.4 | −3.2 | ||
| Chile | 5.8 | 5.9 | 5.5 | 4.9 | 4.6 | 3.0 | 4.4 | 1.5 | 3.0 | 3.0 | 1.5 | −1.3 | −3.5 | −4.0 | −3.6 | ||
| Colombia | 4.0 | 6.6 | 4.0 | 4.1 | 4.5 | 3.2 | 3.7 | 2.4 | 2.4 | 3.0 | −3.1 | −3.0 | −3.4 | −3.4 | −2.9 | ||
| Ecuador | 3.3 | 8.0 | 5.0 | 4.4 | 3.9 | 3.3 | 5.4 | 4.2 | 6.1 | 2.1 | −2.6 | −0.2 | −0.5 | −1.3 | −1.5 | ||
| Guyana | 4.4 | 5.4 | 3.3 | 5.5 | 6.0 | 4.5 | 3.3 | 4.6 | 6.0 | 5.5 | −9.6 | −13.4 | −13.2 | −14.1 | −20.0 | ||
| Paraguay | 13.1 | 4.3 | −1.2 | 11.0 | 4.6 | 7.2 | 4.9 | 4.0 | 5.0 | 5.0 | −3.1 | −1.1 | −2.0 | −2.4 | −2.9 | ||
| Peru | 8.8 | 6.9 | 6.3 | 6.3 | 6.1 | 2.1 | 4.7 | 2.6 | 2.1 | 2.0 | −2.5 | −1.9 | −3.6 | −3.5 | −3.4 | ||
| Suriname | 4.1 | 4.7 | 4.5 | 4.5 | 4.5 | 10.3 | 15.3 | 4.1 | 4.5 | 4.0 | 6.4 | 5.8 | 6.4 | 3.9 | 1.8 | ||
| Uruguay | 8.9 | 5.7 | 3.8 | 3.8 | 4.0 | 6.9 | 8.6 | 7.5 | 7.8 | 7.0 | −1.9 | −2.8 | −3.4 | −2.9 | −2.5 | ||
| Venezuela | −1.5 | 4.2 | 5.5 | 0.1 | 2.3 | 27.2 | 27.6 | 20.1 | 28.0 | 27.3 | 2.2 | 7.7 | 2.9 | 6.2 | 7.7 | ||
| Central America | |||||||||||||||||
| Belize | 2.7 | 1.9 | 5.3 | 2.5 | 2.5 | 0.0 | 2.5 | 0.6 | 2.0 | 2.0 | −2.8 | −1.1 | −2.6 | −3.2 | −3.6 | ||
| Costa Rica | 4.7 | 4.2 | 5.0 | 4.2 | 4.4 | 5.8 | 4.7 | 4.6 | 5.0 | 5.0 | −3.5 | −5.3 | −5.3 | −5.5 | −5.4 | ||
| El Salvador | 1.4 | 2.0 | 1.6 | 1.6 | 1.6 | 2.1 | 5.1 | 0.8 | 2.3 | 2.6 | −2.7 | −4.6 | −5.1 | −4.9 | −4.5 | ||
| Guatemala | 2.9 | 4.1 | 3.0 | 3.3 | 3.4 | 5.4 | 6.2 | 3.4 | 4.5 | 4.8 | −1.5 | −3.6 | −3.5 | −3.7 | −3.6 | ||
| Honduras | 3.7 | 3.7 | 3.3 | 3.3 | 3.0 | 6.5 | 5.6 | 5.4 | 5.9 | 5.7 | −5.3 | −8.5 | −9.9 | −11.2 | −8.7 | ||
| Nicaragua | 3.6 | 5.4 | 5.2 | 4.0 | 4.0 | 5.5 | 8.1 | 7.2 | 7.7 | 7.1 | −11.0 | −13.7 | −15.8 | −13.7 | −13.3 | ||
| Panama | 7.5 | 10.8 | 10.7 | 9.0 | 7.2 | 4.9 | 6.3 | 4.6 | 4.8 | 4.5 | −10.2 | −12.2 | −9.0 | −8.9 | −8.7 | ||
| The Caribbean | |||||||||||||||||
| Antigua and Barbuda | −8.5 | −3.0 | 1.6 | 1.7 | 3.2 | 2.9 | 4.0 | 1.8 | 3.1 | 3.1 | −14.7 | −10.8 | −12.8 | −13.1 | −14.0 | ||
| The Bahamas | 0.2 | 1.6 | 2.5 | 2.7 | 2.5 | 1.5 | 3.2 | 2.3 | 2.0 | 2.0 | −10.5 | −14.0 | −14.1 | −13.7 | −12.8 | ||
| Barbados | 0.2 | 0.6 | 0.0 | 0.5 | 1.0 | 6.6 | 9.5 | 1.2 | −0.3 | −0.7 | −8.2 | −8.7 | −5.7 | −6.1 | −5.8 | ||
| Dominica | 0.7 | 1.9 | 0.4 | 1.3 | 1.5 | 0.1 | 2.0 | 3.6 | 1.5 | 1.6 | −16.2 | −12.8 | −13.5 | −13.8 | −13.9 | ||
| Dominican Republic | 7.8 | 4.5 | 3.9 | 2.2 | 3.4 | 6.2 | 7.8 | 3.9 | 5.0 | 4.5 | −8.4 | −7.9 | −7.2 | −4.6 | −3.3 | ||
| Grenada | −0.4 | 1.0 | −0.8 | 0.5 | 1.0 | 4.2 | 3.5 | 1.8 | 2.6 | 2.6 | −24.1 | −23.3 | −23.0 | −23.4 | −23.4 | ||
| Haiti4 | −5.4 | 5.6 | 2.8 | 6.5 | 6.3 | 4.7 | 10.4 | 6.5 | 5.0 | 4.5 | −12.5 | −4.6 | −4.0 | −5.6 | −5.3 | ||
| Jamaica | −1.4 | 1.5 | 0.1 | 0.5 | 1.2 | 11.8 | 6.0 | 7.4 | 8.3 | 6.2 | −8.7 | −12.6 | −11.9 | −10.3 | −8.7 | ||
| St. Kitts and Nevis | 0.0 | −1.9 | −0.9 | 1.9 | 3.2 | 5.2 | 2.9 | 0.3 | 3.4 | 2.5 | −22.4 | −15.6 | −13.5 | −15.9 | −17.2 | ||
| St. Lucia | 0.2 | 1.4 | −0.4 | 1.1 | 2.2 | 4.2 | 4.8 | 6.2 | 2.4 | 2.8 | −16.9 | −20.1 | −19.1 | −18.2 | −17.2 | ||
| St. Vincent and the Grenadines | −2.3 | 0.4 | 0.5 | 1.0 | 2.0 | 0.9 | 4.7 | 0.8 | 2.4 | 2.5 | −30.6 | −28.8 | −27.9 | −26.8 | −25.2 | ||
| Trinidad and Tobago | 0.2 | −2.6 | 0.4 | 2.0 | 2.5 | 13.4 | 5.3 | 7.2 | 4.0 | 4.0 | 20.3 | 11.1 | 12.1 | 11.0 | 11.2 | ||
| Memorandum: | |||||||||||||||||
| Latin America and the Caribbean (LAC) 1 | 6.1 | 4.6 | 3.0 | 3.4 | 3.9 | 6.6 | 6.8 | 5.9 | 6.1 | 5.5 | -1.2 | -1.3 | -1.7 | -1.7 | -2.0 | ||
| Financially Integrated LAC5 | 6.7 | 5.3 | 4.1 | 4.3 | 4.5 | 4.2 | 5.3 | 4.0 | 4.1 | 3.8 | −1.4 | −2.0 | −2.8 | −2.9 | −2.8 | ||
| Other Commodity Exporters6 | 5.6 | 6.1 | 3.3 | 4.6 | 3.8 | 11.2 | 10.9 | 8.7 | 10.7 | 9.7 | 0.4 | 1.6 | 1.6 | 1.4 | 1.2 | ||
| CAPDR7 | 4.0 | 4.0 | 3.7 | 3.1 | 3.3 | 5.3 | 6.2 | 4.2 | 5.1 | 4.9 | −5.4 | −7.3 | −7.8 | −7.3 | −6.5 | ||
| Caribbean | |||||||||||||||||
| Tourism dependent8 | −1.2 | 0.4 | 0.3 | 1.2 | 2.0 | 4.1 | 4.5 | 2.8 | 2.8 | 2.5 | −16.9 | −16.3 | −15.7 | −15.7 | −15.3 | ||
| Commodity exporters9 | 2.9 | 2.4 | 3.4 | 3.6 | 3.9 | 7.1 | 6.6 | 4.1 | 4.1 | 3.9 | 3.6 | 0.6 | 0.7 | −0.6 | −2.6 | ||
| Eastern Caribbean Currency Union10 | −2.6 | −0.5 | 0.0 | 1.2 | 2.2 | 3.1 | 4.1 | 3.0 | 2.4 | 2.5 | −20.1 | −18.0 | −17.8 | −18.3 | −18.0 | ||
Regional aggregates are PPP-GDP weighted averages, unless otherwise noted.
End-of-period (December) rates. These will generally differ from period average inflation rates reported in the IMF’s World Economic Outlook, although both are based on identical underlying projections.
Data for Argentina are officially reported data. The IMF has, however, issued a declaration of censure and called on Argentina to adopt remedial measures to address the quality of the official GDP and CPI-GBA data. Alternative data sources have shown significantly lower real growth than the official data since 2008, and higher inflation rates than the official data since 2007. In this context, the IMF is also using alternative estimates of GDP growth for the surveillance of macroeconomic developments in Argentina. Note that the data from alternative statistical agencies may also have methodological shortcomings.
Fiscal year data.
Simple average for Brazil, Chile, Colombia, Mexico, Peru, and Uruguay.
Simple average for Argentina, Bolivia, Ecuador, Paraguay, and Venezuela.
Simple average of Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.
Simple average of The Bahamas, Barbados, Jamaica, and ECCU member states.
Simple average of Belize, Guyana, Suriname, and Trinidad and Tobago.
Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines, as well as Anguilla and Montserrat, which are not IMF members.
Western Hemisphere: Main Fiscal Indicators1
Definitions of public sector accounts vary by country, depending on country-specific institutional differences, including on what constitutes the appropriate coverage from a fiscal policy perspective, as defined by the IMF staff. All indicators reported on fiscal year basis. Regional aggregates are PPP-GDP-weighted averages, unless otherwise noted.
Primary balance defined as total revenue less primary expenditures.
Federal government and provinces; includes interest payments on an accrued basis. Primary expenditure and balance include the federal government and provinces. Gross debt is for the federal government only.
Nonfinancial public sector reported for primary balances (excluding statistical discrepancies); combined public sector including Ecopetrol and excluding Banco de la República’s outstanding external debt reported for gross public debt.
Includes central government and social security agency. Gross debt is for the central government only.
Primary expenditures for Suriname exclude net lending.
Consolidated public sector; data for El Salvador include operations of pension trust funds.
Central government only. Gross debt for Belize includes both public and publicly guaranteed debt.
Central government for primary balance accounts; public sector for gross debt.
Fiscal data cover the nonfinancial public sector excluding the Panama Canal Authority.
Overall and primary balances include off-budget and public-private partnership activities for Barbados and the nonfinancial public sector. General government for gross debt.
Eastern Caribbean Currency Union members are Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines. Central government for primary balance accounts; public sector for gross debt.
Simple average for Brazil, Chile, Colombia, Mexico, Peru, and Uruguay.
Simple average for Argentina, Bolivia, Ecuador, Paraguay, and Venezuela.
Simple average of Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.
Simple average of The Bahamas, Barbados, Jamaica, and ECCU member states.
Simple average of Belize, Guyana, Suriname, and Trinidad and Tobago.
Western Hemisphere: Main Fiscal Indicators1
| Public Sector Primary Expenditure (Percent of GDP) |
Public Sector Primary Balance2 (Percent of GDP) |
Public Sector Gross Debt (Percent of GDP) |
|||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2010 | 2011 | 2012 | 2013 | 2014 | 2010 | 2011 | 2012 | 2013 | 2014 | 2010 | 2011 | 2012 | 2013 | 2014 | |||
| Est. | Proj. | Proj. | Est. | Proj. | Proj. | Est. | Proj. | Proj. | |||||||||
| North America | |||||||||||||||||
| Canada | 39.4 | 38.1 | 37.6 | 37.4 | 37.1 | −4.9 | −3.9 | −3.2 | −2.7 | −2.7 | 83.0 | 83.4 | 85.6 | 87.0 | 84.6 | ||
| Mexico | 24.6 | 24.1 | 24.7 | 23.6 | 23.1 | −1.8 | −1.0 | −1.1 | −0.5 | −0.4 | 42.9 | 43.7 | 43.5 | 43.5 | 43.9 | ||
| United States | 39.8 | 38.6 | 37.6 | 36.7 | 36.6 | −8.5 | −7.2 | −5.8 | −3.8 | −2.5 | 98.2 | 102.5 | 106.5 | 108.1 | 109.2 | ||
| South America | |||||||||||||||||
| Argentina3 | 35.6 | 37.9 | 41.2 | 42.3 | 42.5 | 1.6 | −0.5 | −0.9 | −0.6 | −0.5 | 49.2 | 44.9 | 44.9 | 42.4 | 41.7 | ||
| Bolivia | 30.1 | 34.1 | 34.8 | 35.2 | 34.3 | 3.1 | 2.1 | 2.8 | 2.6 | 2.3 | 38.5 | 34.7 | 33.1 | 34.2 | 33.3 | ||
| Brazil | 33.0 | 31.9 | 33.1 | 31.3 | 31.4 | 2.5 | 3.2 | 2.1 | 3.3 | 3.1 | 65.2 | 64.9 | 68.5 | 67.2 | 65.9 | ||
| Chile | 23.4 | 22.7 | 22.7 | 23.1 | 22.8 | 0.2 | 2.0 | 1.2 | 0.9 | 0.7 | 8.6 | 11.1 | 11.2 | 11.1 | 11.4 | ||
| Colombia4 | 26.6 | 26.1 | 25.5 | 26.5 | 25.8 | −0.4 | 0.8 | 2.8 | 1.6 | 1.8 | 36.5 | 35.8 | 32.8 | 32.0 | 31.2 | ||
| Ecuador | 37.2 | 43.3 | 43.6 | 45.2 | 42.8 | −0.8 | −0.2 | 0.2 | −1.7 | −0.7 | 20.9 | 19.9 | 18.6 | 20.0 | 20.6 | ||
| Guyana5 | 29.2 | 29.1 | 31.1 | 30.5 | 30.1 | −1.0 | −1.5 | −3.4 | −1.7 | −1.0 | 65.3 | 65.2 | 60.3 | 61.3 | 60.5 | ||
| Paraguay | 17.9 | 18.8 | 22.3 | 23.3 | 22.5 | 1.6 | 1.0 | −0.8 | −1.9 | −1.2 | 13.7 | 11.9 | 11.4 | 11.3 | 11.5 | ||
| Peru | 19.1 | 17.9 | 18.6 | 18.9 | 19.2 | 0.9 | 3.0 | 3.1 | 2.8 | 2.5 | 24.6 | 22.0 | 19.8 | 17.5 | 16.7 | ||
| Suriname6 | 25.3 | 25.9 | 28.8 | 28.6 | 28.2 | −2.6 | 1.9 | −1.0 | −1.4 | −1.1 | 18.5 | 20.4 | 20.5 | 20.0 | 19.6 | ||
| Uruguay7 | 30.3 | 29.7 | 31.8 | 32.2 | 32.1 | 1.9 | 2.0 | 0.1 | 1.1 | 1.6 | 58.0 | 57.8 | 53.7 | 53.1 | 51.2 | ||
| Venezuela | 30.2 | 37.9 | 42.2 | 37.0 | 33.3 | −9.0 | −10.0 | −15.8 | −8.5 | −5.9 | 25.4 | 39.7 | 57.3 | 61.8 | 63.0 | ||
| Central America | |||||||||||||||||
| Belize8 | 25.7 | 25.9 | 25.6 | 25.7 | 25.5 | 1.8 | 2.3 | 1.3 | 1.0 | 1.0 | 84.4 | 82.3 | 78.1 | 81.8 | 98.9 | ||
| Costa Rica5 | 16.8 | 15.8 | 16.2 | 16.5 | 16.9 | −3.0 | −1.9 | −2.3 | −2.4 | −2.7 | 29.2 | 30.9 | 34.8 | 35.9 | 37.3 | ||
| El Salvador7 | 19.3 | 19.5 | 20.1 | 20.3 | 20.1 | −2.1 | −1.9 | −1.6 | −1.3 | −1.0 | 49.7 | 50.1 | 52.2 | 54.3 | 55.8 | ||
| Guatemala8 | 13.0 | 13.1 | 12.6 | 13.4 | 13.2 | −1.8 | −1.3 | −0.9 | −0.9 | −0.6 | 24.4 | 24.3 | 25.1 | 26.0 | 26.7 | ||
| Honduras9 | 26.1 | 24.9 | 25.9 | 25.9 | 25.7 | −3.4 | −3.0 | −4.2 | −3.9 | −3.9 | 29.7 | 32.1 | 34.7 | 36.2 | 40.3 | ||
| Nicaragua7 | 24.5 | 24.7 | 26.3 | 26.2 | 28.0 | 0.7 | 1.5 | 0.6 | 0.9 | −0.1 | 62.8 | 56.1 | 52.1 | 50.2 | 40.6 | ||
| Panama10 | 23.8 | 24.3 | 25.1 | 24.9 | 24.4 | 0.8 | 0.1 | −0.1 | −1.1 | −1.2 | 39.6 | 39.8 | 38.8 | 36.9 | 38.3 | ||
| The Caribbean | |||||||||||||||||
| Antigua and Barbuda9 | 20.6 | 22.1 | 19.1 | 26.4 | 19.9 | 1.9 | −1.5 | 1.1 | −3.9 | 3.0 | 90.8 | 92.9 | 89.2 | 91.9 | 86.2 | ||
| The Bahamas8 | 19.0 | 20.5 | 21.8 | 22.1 | 21.6 | −2.1 | −1.9 | −3.4 | −3.6 | −2.9 | 45.5 | 48.4 | 51.9 | 56.5 | 58.9 | ||
| Barbados11 | 37.0 | 35.1 | 34.9 | 33.4 | 32.9 | −1.6 | 1.1 | −0.5 | 1.4 | 2.4 | 72.6 | 75.3 | 72.6 | 72.3 | 71.3 | ||
| Dominica9 | 39.6 | 34.2 | 32.0 | 31.3 | 30.6 | −1.9 | −2.9 | −2.2 | −1.8 | −1.3 | 69.9 | 70.7 | 72.2 | 73.6 | 74.7 | ||
| Dominican Republic | 14.2 | 14.0 | 18.4 | 15.8 | 14.7 | −0.6 | −0.5 | −4.6 | −0.2 | 1.4 | 29.0 | 30.3 | 33.5 | 35.0 | 36.2 | ||
| Grenada9 | 25.7 | 25.8 | 23.1 | 24.3 | 23.4 | −1.0 | −2.0 | −2.0 | −3.3 | −2.4 | 104.3 | 109.0 | 112.6 | 116.1 | 118.6 | ||
| Haiti8 | 25.4 | 33.1 | 28.9 | 29.3 | 28.3 | 3.0 | −3.3 | −5.5 | −4.9 | −5.1 | 17.7 | 12.2 | 15.4 | 20.4 | 24.2 | ||
| Jamaica9 | 21.8 | 22.4 | 20.5 | 19.7 | 19.5 | 4.5 | 3.2 | 5.2 | 7.5 | 7.5 | 140.8 | 141.5 | 146.6 | 142.8 | 136.1 | ||
| St. Kitts and Nevis9 | 34.1 | 30.6 | 26.8 | 27.1 | 25.4 | −3.0 | 6.5 | 9.2 | 5.2 | 2.3 | 163.9 | 153.6 | 89.3 | 83.0 | 78.4 | ||
| St. Lucia9 | 28.9 | 31.7 | 33.6 | 31.0 | 30.4 | −1.7 | −3.7 | −8.3 | −5.4 | −4.2 | 66.0 | 71.1 | 78.4 | 84.8 | 89.4 | ||
| St. Vincent and Grenadines9 | 29.8 | 27.9 | 25.7 | 26.4 | 26.5 | −2.4 | −1.2 | 0.0 | −0.3 | 0.2 | 66.2 | 67.8 | 70.2 | 74.2 | 74.7 | ||
| Trinidad and Tobago | 35.9 | 33.5 | 33.7 | 33.7 | 33.2 | −1.3 | 2.1 | 0.4 | 0.3 | 0.1 | 35.5 | 33.4 | 39.7 | 36.4 | 40.7 | ||
| ECCU12 | 28.5 | 28.2 | 26.2 | 27.8 | 25.7 | −0.7 | −0.7 | −0.8 | −2.0 | −0.6 | 86.9 | 87.6 | 80.1 | 81.7 | 81.2 | ||
| Memorandum: | |||||||||||||||||
| Latin America and the Caribbean (LAC) | 33.5 | 33.8 | 34.9 | 33.6 | 33.3 | -0.7 | -0.3 | -0.3 | -0.2 | -0.1 | 48.7 | 49.9 | 51.4 | 50.4 | 49.8 | ||
| Financially Integrated LAC13 | 26.2 | 25.4 | 26.1 | 25.9 | 25.7 | 0.5 | 1.7 | 1.4 | 1.5 | 1.6 | 39.3 | 39.2 | 38.2 | 37.4 | 36.7 | ||
| Other Commodity Exporters14 | 30.2 | 34.4 | 36.8 | 36.6 | 35.1 | −0.7 | −1.5 | −2.9 | −2.0 | −1.2 | 29.6 | 30.2 | 33.0 | 34.0 | 34.0 | ||
| CAPDR15 | 19.0 | 18.7 | 19.9 | 19.7 | 19.8 | −1.7 | −1.2 | −2.2 | −1.3 | −1.1 | 37.5 | 37.3 | 38.7 | 39.6 | 39.5 | ||
| Caribbean | |||||||||||||||||
| Tourism intensive16 | 28.5 | 27.8 | 26.4 | 26.8 | 25.6 | −0.8 | −0.3 | −0.1 | −0.5 | 0.5 | 91.1 | 92.2 | 87.0 | 88.3 | 87.6 | ||
| Commodity exporters17 | 29.0 | 28.6 | 29.8 | 29.6 | 29.2 | −0.8 | 1.2 | −0.7 | −0.4 | −0.2 | 50.9 | 50.3 | 49.7 | 49.9 | 54.9 | ||
Definitions of public sector accounts vary by country, depending on country-specific institutional differences, including on what constitutes the appropriate coverage from a fiscal policy perspective, as defined by the IMF staff. All indicators reported on fiscal year basis. Regional aggregates are PPP-GDP-weighted averages, unless otherwise noted.
Primary balance defined as total revenue less primary expenditures.
Federal government and provinces; includes interest payments on an accrued basis. Primary expenditure and balance include the federal government and provinces. Gross debt is for the federal government only.
Nonfinancial public sector reported for primary balances (excluding statistical discrepancies); combined public sector including Ecopetrol and excluding Banco de la República’s outstanding external debt reported for gross public debt.
Includes central government and social security agency. Gross debt is for the central government only.
Primary expenditures for Suriname exclude net lending.
Consolidated public sector; data for El Salvador include operations of pension trust funds.
Central government only. Gross debt for Belize includes both public and publicly guaranteed debt.
Central government for primary balance accounts; public sector for gross debt.
Fiscal data cover the nonfinancial public sector excluding the Panama Canal Authority.
Overall and primary balances include off-budget and public-private partnership activities for Barbados and the nonfinancial public sector. General government for gross debt.
Eastern Caribbean Currency Union members are Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines. Central government for primary balance accounts; public sector for gross debt.
Simple average for Brazil, Chile, Colombia, Mexico, Peru, and Uruguay.
Simple average for Argentina, Bolivia, Ecuador, Paraguay, and Venezuela.
Simple average of Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.
Simple average of The Bahamas, Barbados, Jamaica, and ECCU member states.
Simple average of Belize, Guyana, Suriname, and Trinidad and Tobago.
Western Hemisphere: Main Fiscal Indicators1
| Public Sector Primary Expenditure (Percent of GDP) |
Public Sector Primary Balance2 (Percent of GDP) |
Public Sector Gross Debt (Percent of GDP) |
|||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2010 | 2011 | 2012 | 2013 | 2014 | 2010 | 2011 | 2012 | 2013 | 2014 | 2010 | 2011 | 2012 | 2013 | 2014 | |||
| Est. | Proj. | Proj. | Est. | Proj. | Proj. | Est. | Proj. | Proj. | |||||||||
| North America | |||||||||||||||||
| Canada | 39.4 | 38.1 | 37.6 | 37.4 | 37.1 | −4.9 | −3.9 | −3.2 | −2.7 | −2.7 | 83.0 | 83.4 | 85.6 | 87.0 | 84.6 | ||
| Mexico | 24.6 | 24.1 | 24.7 | 23.6 | 23.1 | −1.8 | −1.0 | −1.1 | −0.5 | −0.4 | 42.9 | 43.7 | 43.5 | 43.5 | 43.9 | ||
| United States | 39.8 | 38.6 | 37.6 | 36.7 | 36.6 | −8.5 | −7.2 | −5.8 | −3.8 | −2.5 | 98.2 | 102.5 | 106.5 | 108.1 | 109.2 | ||
| South America | |||||||||||||||||
| Argentina3 | 35.6 | 37.9 | 41.2 | 42.3 | 42.5 | 1.6 | −0.5 | −0.9 | −0.6 | −0.5 | 49.2 | 44.9 | 44.9 | 42.4 | 41.7 | ||
| Bolivia | 30.1 | 34.1 | 34.8 | 35.2 | 34.3 | 3.1 | 2.1 | 2.8 | 2.6 | 2.3 | 38.5 | 34.7 | 33.1 | 34.2 | 33.3 | ||
| Brazil | 33.0 | 31.9 | 33.1 | 31.3 | 31.4 | 2.5 | 3.2 | 2.1 | 3.3 | 3.1 | 65.2 | 64.9 | 68.5 | 67.2 | 65.9 | ||
| Chile | 23.4 | 22.7 | 22.7 | 23.1 | 22.8 | 0.2 | 2.0 | 1.2 | 0.9 | 0.7 | 8.6 | 11.1 | 11.2 | 11.1 | 11.4 | ||
| Colombia4 | 26.6 | 26.1 | 25.5 | 26.5 | 25.8 | −0.4 | 0.8 | 2.8 | 1.6 | 1.8 | 36.5 | 35.8 | 32.8 | 32.0 | 31.2 | ||
| Ecuador | 37.2 | 43.3 | 43.6 | 45.2 | 42.8 | −0.8 | −0.2 | 0.2 | −1.7 | −0.7 | 20.9 | 19.9 | 18.6 | 20.0 | 20.6 | ||
| Guyana5 | 29.2 | 29.1 | 31.1 | 30.5 | 30.1 | −1.0 | −1.5 | −3.4 | −1.7 | −1.0 | 65.3 | 65.2 | 60.3 | 61.3 | 60.5 | ||
| Paraguay | 17.9 | 18.8 | 22.3 | 23.3 | 22.5 | 1.6 | 1.0 | −0.8 | −1.9 | −1.2 | 13.7 | 11.9 | 11.4 | 11.3 | 11.5 | ||
| Peru | 19.1 | 17.9 | 18.6 | 18.9 | 19.2 | 0.9 | 3.0 | 3.1 | 2.8 | 2.5 | 24.6 | 22.0 | 19.8 | 17.5 | 16.7 | ||
| Suriname6 | 25.3 | 25.9 | 28.8 | 28.6 | 28.2 | −2.6 | 1.9 | −1.0 | −1.4 | −1.1 | 18.5 | 20.4 | 20.5 | 20.0 | 19.6 | ||
| Uruguay7 | 30.3 | 29.7 | 31.8 | 32.2 | 32.1 | 1.9 | 2.0 | 0.1 | 1.1 | 1.6 | 58.0 | 57.8 | 53.7 | 53.1 | 51.2 | ||
| Venezuela | 30.2 | 37.9 | 42.2 | 37.0 | 33.3 | −9.0 | −10.0 | −15.8 | −8.5 | −5.9 | 25.4 | 39.7 | 57.3 | 61.8 | 63.0 | ||
| Central America | |||||||||||||||||
| Belize8 | 25.7 | 25.9 | 25.6 | 25.7 | 25.5 | 1.8 | 2.3 | 1.3 | 1.0 | 1.0 | 84.4 | 82.3 | 78.1 | 81.8 | 98.9 | ||
| Costa Rica5 | 16.8 | 15.8 | 16.2 | 16.5 | 16.9 | −3.0 | −1.9 | −2.3 | −2.4 | −2.7 | 29.2 | 30.9 | 34.8 | 35.9 | 37.3 | ||
| El Salvador7 | 19.3 | 19.5 | 20.1 | 20.3 | 20.1 | −2.1 | −1.9 | −1.6 | −1.3 | −1.0 | 49.7 | 50.1 | 52.2 | 54.3 | 55.8 | ||
| Guatemala8 | 13.0 | 13.1 | 12.6 | 13.4 | 13.2 | −1.8 | −1.3 | −0.9 | −0.9 | −0.6 | 24.4 | 24.3 | 25.1 | 26.0 | 26.7 | ||
| Honduras9 | 26.1 | 24.9 | 25.9 | 25.9 | 25.7 | −3.4 | −3.0 | −4.2 | −3.9 | −3.9 | 29.7 | 32.1 | 34.7 | 36.2 | 40.3 | ||
| Nicaragua7 | 24.5 | 24.7 | 26.3 | 26.2 | 28.0 | 0.7 | 1.5 | 0.6 | 0.9 | −0.1 | 62.8 | 56.1 | 52.1 | 50.2 | 40.6 | ||
| Panama10 | 23.8 | 24.3 | 25.1 | 24.9 | 24.4 | 0.8 | 0.1 | −0.1 | −1.1 | −1.2 | 39.6 | 39.8 | 38.8 | 36.9 | 38.3 | ||
| The Caribbean | |||||||||||||||||
| Antigua and Barbuda9 | 20.6 | 22.1 | 19.1 | 26.4 | 19.9 | 1.9 | −1.5 | 1.1 | −3.9 | 3.0 | 90.8 | 92.9 | 89.2 | 91.9 | 86.2 | ||
| The Bahamas8 | 19.0 | 20.5 | 21.8 | 22.1 | 21.6 | −2.1 | −1.9 | −3.4 | −3.6 | −2.9 | 45.5 | 48.4 | 51.9 | 56.5 | 58.9 | ||
| Barbados11 | 37.0 | 35.1 | 34.9 | 33.4 | 32.9 | −1.6 | 1.1 | −0.5 | 1.4 | 2.4 | 72.6 | 75.3 | 72.6 | 72.3 | 71.3 | ||
| Dominica9 | 39.6 | 34.2 | 32.0 | 31.3 | 30.6 | −1.9 | −2.9 | −2.2 | −1.8 | −1.3 | 69.9 | 70.7 | 72.2 | 73.6 | 74.7 | ||
| Dominican Republic | 14.2 | 14.0 | 18.4 | 15.8 | 14.7 | −0.6 | −0.5 | −4.6 | −0.2 | 1.4 | 29.0 | 30.3 | 33.5 | 35.0 | 36.2 | ||
| Grenada9 | 25.7 | 25.8 | 23.1 | 24.3 | 23.4 | −1.0 | −2.0 | −2.0 | −3.3 | −2.4 | 104.3 | 109.0 | 112.6 | 116.1 | 118.6 | ||
| Haiti8 | 25.4 | 33.1 | 28.9 | 29.3 | 28.3 | 3.0 | −3.3 | −5.5 | −4.9 | −5.1 | 17.7 | 12.2 | 15.4 | 20.4 | 24.2 | ||
| Jamaica9 | 21.8 | 22.4 | 20.5 | 19.7 | 19.5 | 4.5 | 3.2 | 5.2 | 7.5 | 7.5 | 140.8 | 141.5 | 146.6 | 142.8 | 136.1 | ||
| St. Kitts and Nevis9 | 34.1 | 30.6 | 26.8 | 27.1 | 25.4 | −3.0 | 6.5 | 9.2 | 5.2 | 2.3 | 163.9 | 153.6 | 89.3 | 83.0 | 78.4 | ||
| St. Lucia9 | 28.9 | 31.7 | 33.6 | 31.0 | 30.4 | −1.7 | −3.7 | −8.3 | −5.4 | −4.2 | 66.0 | 71.1 | 78.4 | 84.8 | 89.4 | ||
| St. Vincent and Grenadines9 | 29.8 | 27.9 | 25.7 | 26.4 | 26.5 | −2.4 | −1.2 | 0.0 | −0.3 | 0.2 | 66.2 | 67.8 | 70.2 | 74.2 | 74.7 | ||
| Trinidad and Tobago | 35.9 | 33.5 | 33.7 | 33.7 | 33.2 | −1.3 | 2.1 | 0.4 | 0.3 | 0.1 | 35.5 | 33.4 | 39.7 | 36.4 | 40.7 | ||
| ECCU12 | 28.5 | 28.2 | 26.2 | 27.8 | 25.7 | −0.7 | −0.7 | −0.8 | −2.0 | −0.6 | 86.9 | 87.6 | 80.1 | 81.7 | 81.2 | ||
| Memorandum: | |||||||||||||||||
| Latin America and the Caribbean (LAC) | 33.5 | 33.8 | 34.9 | 33.6 | 33.3 | -0.7 | -0.3 | -0.3 | -0.2 | -0.1 | 48.7 | 49.9 | 51.4 | 50.4 | 49.8 | ||
| Financially Integrated LAC13 | 26.2 | 25.4 | 26.1 | 25.9 | 25.7 | 0.5 | 1.7 | 1.4 | 1.5 | 1.6 | 39.3 | 39.2 | 38.2 | 37.4 | 36.7 | ||
| Other Commodity Exporters14 | 30.2 | 34.4 | 36.8 | 36.6 | 35.1 | −0.7 | −1.5 | −2.9 | −2.0 | −1.2 | 29.6 | 30.2 | 33.0 | 34.0 | 34.0 | ||
| CAPDR15 | 19.0 | 18.7 | 19.9 | 19.7 | 19.8 | −1.7 | −1.2 | −2.2 | −1.3 | −1.1 | 37.5 | 37.3 | 38.7 | 39.6 | 39.5 | ||
| Caribbean | |||||||||||||||||
| Tourism intensive16 | 28.5 | 27.8 | 26.4 | 26.8 | 25.6 | −0.8 | −0.3 | −0.1 | −0.5 | 0.5 | 91.1 | 92.2 | 87.0 | 88.3 | 87.6 | ||
| Commodity exporters17 | 29.0 | 28.6 | 29.8 | 29.6 | 29.2 | −0.8 | 1.2 | −0.7 | −0.4 | −0.2 | 50.9 | 50.3 | 49.7 | 49.9 | 54.9 | ||
Definitions of public sector accounts vary by country, depending on country-specific institutional differences, including on what constitutes the appropriate coverage from a fiscal policy perspective, as defined by the IMF staff. All indicators reported on fiscal year basis. Regional aggregates are PPP-GDP-weighted averages, unless otherwise noted.
Primary balance defined as total revenue less primary expenditures.
Federal government and provinces; includes interest payments on an accrued basis. Primary expenditure and balance include the federal government and provinces. Gross debt is for the federal government only.
Nonfinancial public sector reported for primary balances (excluding statistical discrepancies); combined public sector including Ecopetrol and excluding Banco de la República’s outstanding external debt reported for gross public debt.
Includes central government and social security agency. Gross debt is for the central government only.
Primary expenditures for Suriname exclude net lending.
Consolidated public sector; data for El Salvador include operations of pension trust funds.
Central government only. Gross debt for Belize includes both public and publicly guaranteed debt.
Central government for primary balance accounts; public sector for gross debt.
Fiscal data cover the nonfinancial public sector excluding the Panama Canal Authority.
Overall and primary balances include off-budget and public-private partnership activities for Barbados and the nonfinancial public sector. General government for gross debt.
Eastern Caribbean Currency Union members are Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines. Central government for primary balance accounts; public sector for gross debt.
Simple average for Brazil, Chile, Colombia, Mexico, Peru, and Uruguay.
Simple average for Argentina, Bolivia, Ecuador, Paraguay, and Venezuela.
Simple average of Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.
Simple average of The Bahamas, Barbados, Jamaica, and ECCU member states.
Simple average of Belize, Guyana, Suriname, and Trinidad and Tobago.
Western Hemisphere: Selected Economic and Social Indicators, 2003–121
Estimates may vary from those reported by national authorities on account of differences in methodology and source. Regional aggregates are PPP-GDP weighted averages, except for regional GDP in $US and population where totals are computed.
At market exchange rates, except for Venezuela for which official exchange rates are used.
End-of-period, 12-month percent change.
Exports plus imports of goods and services in percent of GDP.
Data from Socio-Economic Database for Latin America and the Caribbean (SEDLAC). Poverty is share of population earning less than US$2.50 per day. Data for the United States are from the U.S. Census Bureau and for Canada, Statistics Canada.
Median of ratings published by Moody’s, Standard & Poor’s, and Fitch.
Figures on real GDP growth and CPI inflation for Argentina are based on official data. The IMF has, however, issued a declaration of censure and called on Argentina to adopt remedial measures to address the quality of the official GDP and CPI-GBA data. Alternative data sources have shown significantly lower real growth than the official data since 2008, and higher inflation rates than the official data since 2007. In this context, the IMF is also using alternative estimates of GDP growth for the surveillance of macroeconomic developments in Argentina. Note that the data from alternative statistical agencies may also have methodological shortcomings.
Western Hemisphere: Selected Economic and Social Indicators, 2003–121
| 2012 | 2003–12 average | 2012 | Latest available | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| GDP2 ($US bil.) |
Population (Million) |
GDP per capita ($PPP) |
Nominal output share of LAC region2 |
Real GDP growth (Percent) |
CPI inflation3(Percent) |
Current account (Percent of GDP) |
Domestic saving (Percent of GDP) |
Trade openness4(Percent of GDP) |
Gross reserves (Percent of GDP) |
Unemployment rate (Percent) |
Poverty rate5 |
Gini coefficient5 |
Sovereign credit rating6 |
|||
| North America | ||||||||||||||||
| Canada | 1,819.1 | 34.8 | 42,734 | −- | 1.9 | 1.9 | −0.6 | 22.4 | 65.6 | 3.8 | 7.3 | — | 32.0 | AAA | ||
| Mexico | 1,177.1 | 114.9 | 15,312 | 20.4 | 2.5 | 4.3 | −0.9 | 24.1 | 58.6 | 13.6 | 4.8 | 12.6 | 47.5 | BBB | ||
| United States | 15,684.8 | 314.2 | 49,922 | −- | 1.7 | 2.4 | −4.4 | 13.7 | 27.7 | 1.0 | 8.1 | — | 46.9 | AAA | ||
| South America | ||||||||||||||||
| Argentina7 | 475.0 | 41.0 | 18,112 | 8.2 | 7.2 | 8.7 | 2.1 | 23.5 | 42.8 | 8.4 | 7.2 | 5.4 | 43.1 | B- | ||
| Bolivia | 27.4 | 10.8 | 5,099 | 0.5 | 4.5 | 5.9 | 6.4 | 24.0 | 66.0 | 42.8 | — | 31.1 | 55.6 | BB- | ||
| Brazil | 2,396.0 | 198.4 | 11,875 | 41.6 | 3.6 | 5.9 | −0.4 | 17.6 | 25.2 | 15.4 | 5.5 | 15.1 | 53.7 | BBB | ||
| Chile | 268.2 | 17.4 | 18,419 | 4.7 | 4.7 | 3.2 | 0.7 | 23.0 | 71.3 | 15.5 | 6.4 | 4.3 | 51.9 | AA- | ||
| Colombia | 366.0 | 46.6 | 10,792 | 6.3 | 4.7 | 4.6 | −2.2 | 19.6 | 34.8 | 10.0 | 10.4 | 12.8 | 56.5 | BBB- | ||
| Ecuador | 80.9 | 15.2 | 10,056 | 1.4 | 4.6 | 4.3 | 0.6 | 24.4 | 60.4 | 1.4 | 5.3 | 16.2 | 48.9 | B- | ||
| Guyana | 2.8 | 0.8 | 7,939 | 0.0 | 3.0 | 5.9 | −9.9 | 8.1 | 131.3 | 31.0 | — | — | — | |||
| Paraguay | 26.0 | 6.7 | 6,136 | 0.5 | 3.9 | 6.6 | −0.1 | 15.8 | 94.2 | 17.6 | 5.8 | 18.4 | 52.2 | BB- | ||
| Peru | 199.0 | 30.5 | 10,719 | 3.5 | 6.5 | 2.9 | −0.8 | 21.5 | 46.8 | 31.3 | 6.8 | 18.4 | 47.2 | BBB | ||
| Suriname | 4.7 | 0.5 | 12,398 | 0.1 | 5.0 | 9.1 | 0.3 | — | 101.1 | 18.8 | — | 45.1 | 61.6 | BB- | ||
| Uruguay | 49.4 | 3.4 | 15,911 | 0.9 | 5.2 | 7.6 | −1.8 | 17.2 | 56.5 | 27.5 | 6.1 | 2.8 | 45.3 | BBB- | ||
| Venezuela | 382.4 | 29.5 | 13,616 | 6.6 | 5.0 | 23.1 | 9.0 | 33.1 | 51.6 | 2.8 | 7.8 | 14.1 | 38.7 | B+ | ||
| Central America | ||||||||||||||||
| Belize | 1.6 | 0.3 | 8,754 | 0.0 | 3.7 | 2.4 | −7.6 | 12.6 | 123.0 | 18.7 | 16.1 | 38.1 | 52.9 | B- | ||
| Costa Rica | 45.1 | 4.7 | 12,606 | 0.8 | 4.9 | 9.0 | −5.0 | 17.4 | 92.3 | 15.2 | 7.3 | 9.0 | 49.7 | BB+ | ||
| El Salvador | 23.8 | 6.2 | 7,438 | 0.4 | 1.9 | 3.5 | −4.4 | 11.0 | 71.5 | 11.8 | 5.7 | 22.0 | 45.5 | BB- | ||
| Guatemala | 49.9 | 15.1 | 5,209 | 0.9 | 3.4 | 6.2 | −3.7 | 13.8 | 64.6 | 12.7 | — | 46.7 | 55.8 | BB+ | ||
| Honduras | 18.4 | 8.2 | 4,610 | 0.3 | 4.2 | 6.9 | −7.3 | 20.2 | 123.8 | 13.6 | 4.4 | 40.6 | 56.7 | B+ | ||
| Nicaragua | 10.5 | 6.0 | 4,458 | 0.2 | 3.7 | 8.8 | −12.5 | 15.9 | 97.0 | 18.0 | 7.8 | 42.7 | 52.3 | B- | ||
| Panama | 36.3 | 3.7 | 15,617 | 0.6 | 8.3 | 3.8 | −7.1 | 16.3 | 70.2 | 6.7 | 4.2 | 13.2 | 51.9 | BBB | ||
| The Caribbean | ||||||||||||||||
| The Bahamas | 8.0 | 0.4 | 31,382 | 0.1 | 0.4 | 2.4 | −10.4 | 15.7 | 91.6 | 10.5 | 11.0 | 3.9 | — | BBB+ | ||
| Barbados | 4.5 | 0.3 | 25,373 | 0.1 | 1.2 | 5.1 | −6.4 | 11.0 | 94.3 | 18.1 | 11.0 | — | — | BB+ | ||
| Dominican Republic | 59.0 | 10.2 | 9,646 | 1.0 | 5.4 | 12.1 | −3.9 | 12.7 | 66.9 | 6.0 | 13.0 | 16.1 | 47.2 | B+ | ||
| Haiti | 7.9 | 10.4 | 1,243 | 0.1 | 1.1 | 13.1 | −3.4 | 25.0 | 61.1 | 16.3 | — | 78.8 | 59.2 | — | ||
| Jamaica | 15.2 | 2.8 | 9,159 | 0.3 | 0.6 | 11.5 | −11.2 | 14.7 | 90.9 | 9.1 | 13.0 | 43.1 | 59.9 | CCC | ||
| Trinidad and Tobago | 25.3 | 1.3 | 20,087 | 0.4 | 4.4 | 7.4 | 19.0 | 36.1 | 100.8 | 38.8 | 5.5 | — | — | A- | ||
| Eastern Caribbean Currency Union | 5.1 | 0.6 | 14,692 | 0.1 | 2.0 | 3.1 | −20.5 | 12.4 | 99.8 | 21.2 | — | — | — | — | ||
| Antigua and Barbuda | 1.2 | 0.1 | 18,027 | 0.0 | 1.7 | 2.4 | −17.9 | 20.7 | 114.4 | 13.5 | — | — | — | — | ||
| Dominica | 0.5 | 0.1 | 14,166 | 0.0 | 2.3 | 2.5 | −17.9 | 1.4 | 90.6 | 18.8 | 9.8 | — | — | — | ||
| Grenada | 0.8 | 0.1 | 13,697 | 0.0 | 1.8 | 3.2 | −22.7 | 7.5 | 82.2 | 15.0 | — | — | — | C | ||
| St. Kitts and St. Nevis | 0.7 | 0.1 | 16,241 | 0.0 | 1.4 | 3.7 | −19.7 | 25.6 | 87.5 | 35.7 | — | — | — | — | ||
| St. Lucia | 1.2 | 0.2 | 13,104 | 0.0 | 2.8 | 3.2 | −20.2 | 10.4 | 113.3 | 18.8 | 20.6 | — | — | — | ||
| St. Vincent and the Grenadines | 0.7 | 0.1 | 11,776 | 0.0 | 2.0 | 3.5 | −25.2 | 1.5 | 86.7 | 15.5 | — | 2.9 | 40.2 | B | ||
| Latin America and the Caribbeany 1 | 5,765.6 | 585.8 | 12,332 | 100.0 | 4.1 | 6.4 | -0.1 | 16.2 | 44.8 | 13.9 | — | — | — | — | ||
Estimates may vary from those reported by national authorities on account of differences in methodology and source. Regional aggregates are PPP-GDP weighted averages, except for regional GDP in $US and population where totals are computed.
At market exchange rates, except for Venezuela for which official exchange rates are used.
End-of-period, 12-month percent change.
Exports plus imports of goods and services in percent of GDP.
Data from Socio-Economic Database for Latin America and the Caribbean (SEDLAC). Poverty is share of population earning less than US$2.50 per day. Data for the United States are from the U.S. Census Bureau and for Canada, Statistics Canada.
Median of ratings published by Moody’s, Standard & Poor’s, and Fitch.
Figures on real GDP growth and CPI inflation for Argentina are based on official data. The IMF has, however, issued a declaration of censure and called on Argentina to adopt remedial measures to address the quality of the official GDP and CPI-GBA data. Alternative data sources have shown significantly lower real growth than the official data since 2008, and higher inflation rates than the official data since 2007. In this context, the IMF is also using alternative estimates of GDP growth for the surveillance of macroeconomic developments in Argentina. Note that the data from alternative statistical agencies may also have methodological shortcomings.
Western Hemisphere: Selected Economic and Social Indicators, 2003–121
| 2012 | 2003–12 average | 2012 | Latest available | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| GDP2 ($US bil.) |
Population (Million) |
GDP per capita ($PPP) |
Nominal output share of LAC region2 |
Real GDP growth (Percent) |
CPI inflation3(Percent) |
Current account (Percent of GDP) |
Domestic saving (Percent of GDP) |
Trade openness4(Percent of GDP) |
Gross reserves (Percent of GDP) |
Unemployment rate (Percent) |
Poverty rate5 |
Gini coefficient5 |
Sovereign credit rating6 |
|||
| North America | ||||||||||||||||
| Canada | 1,819.1 | 34.8 | 42,734 | −- | 1.9 | 1.9 | −0.6 | 22.4 | 65.6 | 3.8 | 7.3 | — | 32.0 | AAA | ||
| Mexico | 1,177.1 | 114.9 | 15,312 | 20.4 | 2.5 | 4.3 | −0.9 | 24.1 | 58.6 | 13.6 | 4.8 | 12.6 | 47.5 | BBB | ||
| United States | 15,684.8 | 314.2 | 49,922 | −- | 1.7 | 2.4 | −4.4 | 13.7 | 27.7 | 1.0 | 8.1 | — | 46.9 | AAA | ||
| South America | ||||||||||||||||
| Argentina7 | 475.0 | 41.0 | 18,112 | 8.2 | 7.2 | 8.7 | 2.1 | 23.5 | 42.8 | 8.4 | 7.2 | 5.4 | 43.1 | B- | ||
| Bolivia | 27.4 | 10.8 | 5,099 | 0.5 | 4.5 | 5.9 | 6.4 | 24.0 | 66.0 | 42.8 | — | 31.1 | 55.6 | BB- | ||
| Brazil | 2,396.0 | 198.4 | 11,875 | 41.6 | 3.6 | 5.9 | −0.4 | 17.6 | 25.2 | 15.4 | 5.5 | 15.1 | 53.7 | BBB | ||
| Chile | 268.2 | 17.4 | 18,419 | 4.7 | 4.7 | 3.2 | 0.7 | 23.0 | 71.3 | 15.5 | 6.4 | 4.3 | 51.9 | AA- | ||
| Colombia | 366.0 | 46.6 | 10,792 | 6.3 | 4.7 | 4.6 | −2.2 | 19.6 | 34.8 | 10.0 | 10.4 | 12.8 | 56.5 | BBB- | ||
| Ecuador | 80.9 | 15.2 | 10,056 | 1.4 | 4.6 | 4.3 | 0.6 | 24.4 | 60.4 | 1.4 | 5.3 | 16.2 | 48.9 | B- | ||
| Guyana | 2.8 | 0.8 | 7,939 | 0.0 | 3.0 | 5.9 | −9.9 | 8.1 | 131.3 | 31.0 | — | — | — | |||
| Paraguay | 26.0 | 6.7 | 6,136 | 0.5 | 3.9 | 6.6 | −0.1 | 15.8 | 94.2 | 17.6 | 5.8 | 18.4 | 52.2 | BB- | ||
| Peru | 199.0 | 30.5 | 10,719 | 3.5 | 6.5 | 2.9 | −0.8 | 21.5 | 46.8 | 31.3 | 6.8 | 18.4 | 47.2 | BBB | ||
| Suriname | 4.7 | 0.5 | 12,398 | 0.1 | 5.0 | 9.1 | 0.3 | — | 101.1 | 18.8 | — | 45.1 | 61.6 | BB- | ||
| Uruguay | 49.4 | 3.4 | 15,911 | 0.9 | 5.2 | 7.6 | −1.8 | 17.2 | 56.5 | 27.5 | 6.1 | 2.8 | 45.3 | BBB- | ||
| Venezuela | 382.4 | 29.5 | 13,616 | 6.6 | 5.0 | 23.1 | 9.0 | 33.1 | 51.6 | 2.8 | 7.8 | 14.1 | 38.7 | B+ | ||
| Central America | ||||||||||||||||
| Belize | 1.6 | 0.3 | 8,754 | 0.0 | 3.7 | 2.4 | −7.6 | 12.6 | 123.0 | 18.7 | 16.1 | 38.1 | 52.9 | B- | ||
| Costa Rica | 45.1 | 4.7 | 12,606 | 0.8 | 4.9 | 9.0 | −5.0 | 17.4 | 92.3 | 15.2 | 7.3 | 9.0 | 49.7 | BB+ | ||
| El Salvador | 23.8 | 6.2 | 7,438 | 0.4 | 1.9 | 3.5 | −4.4 | 11.0 | 71.5 | 11.8 | 5.7 | 22.0 | 45.5 | BB- | ||
| Guatemala | 49.9 | 15.1 | 5,209 | 0.9 | 3.4 | 6.2 | −3.7 | 13.8 | 64.6 | 12.7 | — | 46.7 | 55.8 | BB+ | ||
| Honduras | 18.4 | 8.2 | 4,610 | 0.3 | 4.2 | 6.9 | −7.3 | 20.2 | 123.8 | 13.6 | 4.4 | 40.6 | 56.7 | B+ | ||
| Nicaragua | 10.5 | 6.0 | 4,458 | 0.2 | 3.7 | 8.8 | −12.5 | 15.9 | 97.0 | 18.0 | 7.8 | 42.7 | 52.3 | B- | ||
| Panama | 36.3 | 3.7 | 15,617 | 0.6 | 8.3 | 3.8 | −7.1 | 16.3 | 70.2 | 6.7 | 4.2 | 13.2 | 51.9 | BBB | ||
| The Caribbean | ||||||||||||||||
| The Bahamas | 8.0 | 0.4 | 31,382 | 0.1 | 0.4 | 2.4 | −10.4 | 15.7 | 91.6 | 10.5 | 11.0 | 3.9 | — | BBB+ | ||
| Barbados | 4.5 | 0.3 | 25,373 | 0.1 | 1.2 | 5.1 | −6.4 | 11.0 | 94.3 | 18.1 | 11.0 | — | — | BB+ | ||
| Dominican Republic | 59.0 | 10.2 | 9,646 | 1.0 | 5.4 | 12.1 | −3.9 | 12.7 | 66.9 | 6.0 | 13.0 | 16.1 | 47.2 | B+ | ||
| Haiti | 7.9 | 10.4 | 1,243 | 0.1 | 1.1 | 13.1 | −3.4 | 25.0 | 61.1 | 16.3 | — | 78.8 | 59.2 | — | ||
| Jamaica | 15.2 | 2.8 | 9,159 | 0.3 | 0.6 | 11.5 | −11.2 | 14.7 | 90.9 | 9.1 | 13.0 | 43.1 | 59.9 | CCC | ||
| Trinidad and Tobago | 25.3 | 1.3 | 20,087 | 0.4 | 4.4 | 7.4 | 19.0 | 36.1 | 100.8 | 38.8 | 5.5 | — | — | A- | ||
| Eastern Caribbean Currency Union | 5.1 | 0.6 | 14,692 | 0.1 | 2.0 | 3.1 | −20.5 | 12.4 | 99.8 | 21.2 | — | — | — | — | ||
| Antigua and Barbuda | 1.2 | 0.1 | 18,027 | 0.0 | 1.7 | 2.4 | −17.9 | 20.7 | 114.4 | 13.5 | — | — | — | — | ||
| Dominica | 0.5 | 0.1 | 14,166 | 0.0 | 2.3 | 2.5 | −17.9 | 1.4 | 90.6 | 18.8 | 9.8 | — | — | — | ||
| Grenada | 0.8 | 0.1 | 13,697 | 0.0 | 1.8 | 3.2 | −22.7 | 7.5 | 82.2 | 15.0 | — | — | — | C | ||
| St. Kitts and St. Nevis | 0.7 | 0.1 | 16,241 | 0.0 | 1.4 | 3.7 | −19.7 | 25.6 | 87.5 | 35.7 | — | — | — | — | ||
| St. Lucia | 1.2 | 0.2 | 13,104 | 0.0 | 2.8 | 3.2 | −20.2 | 10.4 | 113.3 | 18.8 | 20.6 | — | — | — | ||
| St. Vincent and the Grenadines | 0.7 | 0.1 | 11,776 | 0.0 | 2.0 | 3.5 | −25.2 | 1.5 | 86.7 | 15.5 | — | 2.9 | 40.2 | B | ||
| Latin America and the Caribbeany 1 | 5,765.6 | 585.8 | 12,332 | 100.0 | 4.1 | 6.4 | -0.1 | 16.2 | 44.8 | 13.9 | — | — | — | — | ||
Estimates may vary from those reported by national authorities on account of differences in methodology and source. Regional aggregates are PPP-GDP weighted averages, except for regional GDP in $US and population where totals are computed.
At market exchange rates, except for Venezuela for which official exchange rates are used.
End-of-period, 12-month percent change.
Exports plus imports of goods and services in percent of GDP.
Data from Socio-Economic Database for Latin America and the Caribbean (SEDLAC). Poverty is share of population earning less than US$2.50 per day. Data for the United States are from the U.S. Census Bureau and for Canada, Statistics Canada.
Median of ratings published by Moody’s, Standard & Poor’s, and Fitch.
Figures on real GDP growth and CPI inflation for Argentina are based on official data. The IMF has, however, issued a declaration of censure and called on Argentina to adopt remedial measures to address the quality of the official GDP and CPI-GBA data. Alternative data sources have shown significantly lower real growth than the official data since 2008, and higher inflation rates than the official data since 2007. In this context, the IMF is also using alternative estimates of GDP growth for the surveillance of macroeconomic developments in Argentina. Note that the data from alternative statistical agencies may also have methodological shortcomings.
Macroprudential (MaP) and Capital Flow Management (CFM) Measures in Latin America, 2008–13
Chile’s 2011 system of forward-looking provisioning is not classified as dynamic provisioning as it does not involve accumulating generic provisions in a reserve fund as is the case in the other countries cited, but rather bases a specific provision on forward-looking estimates of loan default.
In many countries liquidity requirements exists, but they do not necessarily involve stress testing conditions.
In recent months, Brazil has eased macroprudential policies by (i) lowering the capital requirements on auto loans and personal credit with maturities less than 36 months and payroll deduction loans with maturities less than 60 months—while raising the capital requirements on longer-term loans (Nov-2011); and (ii) authorizing large banks to acquire credit portfolios and securities of small banks through the use of resources locked in reserve requirements on time deposits (Dec-2011). To encourage the acquisition of these, the remuneration on time deposits was decreased.
In Brazil, in addition to increasing (reducing) the IOF tax rate, the base of the tax was increased (reduced) to include (exclude) flows of longer maturities.
Macroprudential (MaP) and Capital Flow Management (CFM) Measures in Latin America, 2008–13
| Motivation | Country | |||
|---|---|---|---|---|
| Policy tool | MaP | CFM | Objective | |
| Capital requirements and loan-to-value ratios | Slow down credit growth. | Brazil (long-term consumer loan market, 2010↑↑11↓),3 Peru (countercyclical and concentration-based capital requirements, 2010↑) | ||
| Dynamic provisioning1 | ✓ | Build up cushion against expected losses in good times to be used in bad times. | Bolivia (2008), Colombia (2007), Peru (2008), Uruguay (2001) | |
| Liquidity requirements2 | ✓ | Measures to identify, monitor, and control liquidity risk under conditions of stress. | Colombia (2008) | |
| Directed credit requirements | ✓ | Contain/stimulate sector-specific credit. | Brazil (2012: raise required ratio of credit to farming sector ↓, extend export financing period from 1 year to 5 years ↑↓) | |
| Large banks buy medium/small banks’ loans portfolio | ✓ | Ease funding constraints in medium/small banks. | Brazil (2012↓) | |
| Taxes on credit | ✓ | Reduce credit growth. | Brazil (2011↑, 2012↓, 2013↓) | |
| Reserve requirements on bank deposits | ✓ | Limit credit growth, manage liquidity, and complement monetary policy. | Peru (2010↑, 2011↑, 2012↑↑), Brazil (2010↑, 2011↓, 2012↓↓),3 Uruguay (2009, 2010, 2011, 2012↑, 2013↑), Peru (2013↑) | |
| Reserve requirements on short-term external liabilities of banks | ✓ | Make short-term borrowing less attractive to banks. | Peru (2010↑, 2011↓) | |
| Limits to manage foreign exchange credit risk | ✓ | ✓ | Internalize credit risks from lending to unhedged borrowers. | Peru (2010↑), Uruguay (2010↑) |
| Limits on foreign exchange positions | ✓ | ✓ | Manage foreign exchange risk in on- and off-balance sheet assets and liabilities of banks. | Brazil (reserve requirement on short spot dollar positions, 2011↑↑), Peru (2010, on net FX derivative position, 2011↑), Brazil 2012↓ (raised exemption threshold of banks’ short dollar position) |
| Reserve requirements on nonresident financial institutions | ✓ | ✓ | Reduce incentives for short-term capital inflow s and tilt the composition of bank liabilities toward a more stable base. | Peru (2010↑), Uruguay (reserve requirements on new foreign purchases of short-term central bank paper, 2012↑), Costa Rica (2013↑, proposal) |
| Tax on foreign borrowing4 | ✓ | Lower short-term capital inflows and tilt the maturity structure toward the long term. | Brazil (IOF tax, 2010↑, 2011↑ and 2011–12↓), Colombia (2013↓), Brazil (2013↓: IOF exempted on foreign purchases in real estate investment trusts.) | |
| Limits to foreign investment by domestic pension funds | ✓ | Manage capital outflow s to offset pressures on currency. | Peru (2010) | |
Chile’s 2011 system of forward-looking provisioning is not classified as dynamic provisioning as it does not involve accumulating generic provisions in a reserve fund as is the case in the other countries cited, but rather bases a specific provision on forward-looking estimates of loan default.
In many countries liquidity requirements exists, but they do not necessarily involve stress testing conditions.
In recent months, Brazil has eased macroprudential policies by (i) lowering the capital requirements on auto loans and personal credit with maturities less than 36 months and payroll deduction loans with maturities less than 60 months—while raising the capital requirements on longer-term loans (Nov-2011); and (ii) authorizing large banks to acquire credit portfolios and securities of small banks through the use of resources locked in reserve requirements on time deposits (Dec-2011). To encourage the acquisition of these, the remuneration on time deposits was decreased.
In Brazil, in addition to increasing (reducing) the IOF tax rate, the base of the tax was increased (reduced) to include (exclude) flows of longer maturities.
Macroprudential (MaP) and Capital Flow Management (CFM) Measures in Latin America, 2008–13
| Motivation | Country | |||
|---|---|---|---|---|
| Policy tool | MaP | CFM | Objective | |
| Capital requirements and loan-to-value ratios | Slow down credit growth. | Brazil (long-term consumer loan market, 2010↑↑11↓),3 Peru (countercyclical and concentration-based capital requirements, 2010↑) | ||
| Dynamic provisioning1 | ✓ | Build up cushion against expected losses in good times to be used in bad times. | Bolivia (2008), Colombia (2007), Peru (2008), Uruguay (2001) | |
| Liquidity requirements2 | ✓ | Measures to identify, monitor, and control liquidity risk under conditions of stress. | Colombia (2008) | |
| Directed credit requirements | ✓ | Contain/stimulate sector-specific credit. | Brazil (2012: raise required ratio of credit to farming sector ↓, extend export financing period from 1 year to 5 years ↑↓) | |
| Large banks buy medium/small banks’ loans portfolio | ✓ | Ease funding constraints in medium/small banks. | Brazil (2012↓) | |
| Taxes on credit | ✓ | Reduce credit growth. | Brazil (2011↑, 2012↓, 2013↓) | |
| Reserve requirements on bank deposits | ✓ | Limit credit growth, manage liquidity, and complement monetary policy. | Peru (2010↑, 2011↑, 2012↑↑), Brazil (2010↑, 2011↓, 2012↓↓),3 Uruguay (2009, 2010, 2011, 2012↑, 2013↑), Peru (2013↑) | |
| Reserve requirements on short-term external liabilities of banks | ✓ | Make short-term borrowing less attractive to banks. | Peru (2010↑, 2011↓) | |
| Limits to manage foreign exchange credit risk | ✓ | ✓ | Internalize credit risks from lending to unhedged borrowers. | Peru (2010↑), Uruguay (2010↑) |
| Limits on foreign exchange positions | ✓ | ✓ | Manage foreign exchange risk in on- and off-balance sheet assets and liabilities of banks. | Brazil (reserve requirement on short spot dollar positions, 2011↑↑), Peru (2010, on net FX derivative position, 2011↑), Brazil 2012↓ (raised exemption threshold of banks’ short dollar position) |
| Reserve requirements on nonresident financial institutions | ✓ | ✓ | Reduce incentives for short-term capital inflow s and tilt the composition of bank liabilities toward a more stable base. | Peru (2010↑), Uruguay (reserve requirements on new foreign purchases of short-term central bank paper, 2012↑), Costa Rica (2013↑, proposal) |
| Tax on foreign borrowing4 | ✓ | Lower short-term capital inflows and tilt the maturity structure toward the long term. | Brazil (IOF tax, 2010↑, 2011↑ and 2011–12↓), Colombia (2013↓), Brazil (2013↓: IOF exempted on foreign purchases in real estate investment trusts.) | |
| Limits to foreign investment by domestic pension funds | ✓ | Manage capital outflow s to offset pressures on currency. | Peru (2010) | |
Chile’s 2011 system of forward-looking provisioning is not classified as dynamic provisioning as it does not involve accumulating generic provisions in a reserve fund as is the case in the other countries cited, but rather bases a specific provision on forward-looking estimates of loan default.
In many countries liquidity requirements exists, but they do not necessarily involve stress testing conditions.
In recent months, Brazil has eased macroprudential policies by (i) lowering the capital requirements on auto loans and personal credit with maturities less than 36 months and payroll deduction loans with maturities less than 60 months—while raising the capital requirements on longer-term loans (Nov-2011); and (ii) authorizing large banks to acquire credit portfolios and securities of small banks through the use of resources locked in reserve requirements on time deposits (Dec-2011). To encourage the acquisition of these, the remuneration on time deposits was decreased.
In Brazil, in addition to increasing (reducing) the IOF tax rate, the base of the tax was increased (reduced) to include (exclude) flows of longer maturities.
With a rising share of financial services provided outside the banking system, countries should also step up efforts to increase the perimeter of regulation and supervision to nonbank financial institutions (see Box 2.3). Greater efforts are also needed to improve data collection to allow better monitoring of financial sector vulnerabilities. The establishment of comprehensive credit registries for individual borrowers, for example, should improve the assessment of credit risk.
Other Commodity Exporters4
Developments
After expanding rapidly in 2011, growth in most of the less-financially integrated commodity exporters slowed, although output gaps remained closed or positive in most countries. The slowdown was particularly sharp in Argentina and Paraguay, which were affected by weather-related shocks, and softer activity in Brazil. In the case of Argentina, import and foreign exchange restrictions also weighed heavily on investment and activity. The slowdown was less pronounced in the case of Ecuador, whereas in Venezuela, output growth rose on the back of highly expansionary policies (Figure 2.9).
In other commodity-exporting countries in South America, policies remained highly procyclical, with large private capital outflows in some cases.
External current account balances in most of these countries continued to deteriorate, often driven by strong public sector spending. In Argentina and Venezuela, inflation remained high and capital flight continued (although at a slower pace than in 2011), despite further tightening of import and exchange restrictions aimed at limiting reserve losses.
Outlook and Policy Priorities
Growth is projected to moderate in 2013 for the energy exporters (Bolivia, Ecuador, and Venezuela). This projection hinges on the adoption of prudent macroeconomic policies, which are necessary to contain inflation and improve confidence. In contrast, growth in Paraguay is expected to pick up sharply, supported by the unwinding of weather-related shocks and the recovery in Brazil.
Going forward, these countries would benefit from saving a much larger share of their commodity revenues (see Chapter 5). On average, primary public spending has increased by 10 percentage points of GDP since 2005. Given these countries’ high vulnerability to terms-of-trade shocks, spending will need to be reined in to ensure fiscal sustainability. Countries could also take advantage of the current favorable global financing conditions to extend the maturity profile of their public debt.5
Central America, Panama, and the Dominican Republic
Developments
Average growth in Central America and the Dominican Republic was about 3½ percent during 2012, and activity remains close to potential in most countries. Strong domestic demand helped offset somewhat weaker net exports. Panama continued to post the strongest growth in the region, boosted by investment related to the canal expansion and a large public investment program. At the other end of the spectrum, activity remained subdued in El Salvador. Inflation declined across the region to 4¼ percent by end-2012 (2 percentage points lower than in 2011), due in part to lower energy and food prices (Figure 2.10).
In the Central American region, growth continues to hold up well, but fiscal consolidation efforts have waned in many countries.
After a robust performance in 2011, export growth decelerated in most countries, reflecting weaker demand from the United States and lower coffee prices. Remittances also slowed in some cases. As a result, the external current account deficits widened to an average of 8 percent of GDP. The deficits continued to be financed mainly with FDI and official flows, although in the case of Costa Rica, private non-FDI inflows increased sharply in the second half of 2012.
Outlook and Policy Priorities
Growth in these countries is projected to remain close to potential in 2013. Risks are mainly related to the outlook for the United States and to oil price developments. A sharp increase in oil prices would widen further current account deficits, and increase fiscal strains in countries with energy subsidy schemes. Policy uncertainty in Venezuela could also increase external vulnerability in some countries (e.g., Nicaragua), which have benefited from concessional oil import financing.
Public debt remains above pre-Lehman levels in most of the region, and consolidation efforts have lost momentum. In 2012, real primary expenditure growth accelerated, while tax revenues remained low.6 Looking ahead, gradual tightening of fiscal policy would be necessary to reduce fiscal and external imbalances and ensure debt sustainability. Consolidation efforts should include both a reduction in the pace of government spending (particularly in public wage and energy subsidies) and revenue mobilization.
Countries with a domestic currency would benefit from a gradual move to greater exchange rate flexibility. More flexible exchange rates would provide a buffer against external shocks, and could reduce vulnerabilities by creating incentives for corporations to hedge foreign currency borrowing.
The Caribbean
Developments
The recovery in much of the Caribbean remains weak. Growth in the tourism-dependent economies averaged under ½ percent in 2012 (more than ½ percentage point below the October 2012 Regional Economic Outlook projections). Tourist arrivals slowed in the second half of 2012 reflecting subdued growth in the advanced economies. In contrast, growth was more robust in the Caribbean’s commodity exporters (Belize, Guyana, Suriname, and Trinidad and Tobago), reaching an average of about 3½ percent in 2012.7 Meanwhile in Haiti, growth slowed to 2¾ percent in 2012 (compared with 5½ percent in 2011), mainly on account of delays in the implementation of reconstruction-related projects.
Weak domestic demand and large output gaps helped keep inflation low in much of the region. Meanwhile, the external current account deficit in the tourism-dependent economies remained high (more than 16 percent of GDP on average), largely reflecting the region’s high dependency on energy imports. These deficits continued to be financed largely by FDI and official flows (including from Venezuela), although international reserves were used in some cases (especially Jamaica) (Figure 2.11).
Growth in most of the Caribbean continues to be held back by high debt levels and weak competitiveness.
Fiscal consolidation continued, although in many cases it fell short of initial plans. Primary fiscal balances improved slightly in most tourism-dependent economies (deteriorating in Barbados and St. Lucia), and public debt levels have started to stabilize, albeit at high levels. Fiscal efforts are being accompanied by debt restructurings in a few countries, including Jamaica, St. Kitts and Nevis, and more recently Grenada.8
In the commodity-exporting Caribbean, debt levels remain relatively low, although they have risen in the case of Trinidad and Tobago owing to assumption of liabilities related to the rescue of a large financial company.
Outlook and Policy Priorities
Going forward, growth in tourism-dependent economies is expected to pick up only gradually, constrained by high debt levels and weak competitiveness. These economies are projected to expand by about 1¼ percent in 2013, as external demand strengthens gradually. Risks, however, remain tilted to the downside. Higher oil prices or lower oil-related concessional financing could heighten external imbalances in some aid recipients (Dominica, Grenada, Guyana, Haiti, Jamaica, and St. Kitts and Nevis).
The key challenge for these countries is to reduce high public debt. Fiscal retrenchment is critical to address growing external imbalances (see Box 2.4). In this regard, expenditure growth rules could be a useful tool to limit the growth in public wages, especially if combined with civil service reform. Consolidation efforts should protect infrastructure investment and social spending.
Financial sector vulnerabilities still need to be addressed. Deteriorating asset quality, inadequate provisioning and low profitability have put the financial system under stress in much of the Eastern Caribbean Currency Union (ECCU). Several indigenous banks and systemically important credit unions need to be resolved to avoid contagion while containing associated fiscal costs.
In the Caribbean commodity-exporting economies, growth is expected to be about 3½ to 4 percent during 2013–14. The key near-term challenge is to contain the rapid growth in domestic demand, which continues to outpace output growth. As in the case of other commodity exporters, greater fiscal efforts are needed to rebuild policy space.
Taking Stock of European Banks’ Deleveraging in Latin America
A large-scale withdrawal of European banks from Latin America has been a major concern of policymakers since the onset of the European financial crisis. This box documents the extent of European banks’ deleveraging in Latin America in recent years, focusing on Brazil, Chile, and Mexico. The data suggest that deleveraging by European banks has been relatively modest, with limited impact on overall credit availability, although European subsidiaries appear to have been more cautious in extending credit than their domestic counterparts lately.
Foreign banks’ total claims (Figure 1): Total consolidated claims by European banks (including both cross-border claims by parent banks and local claims by subsidiaries) have either declined (Brazil and Mexico) or remained broadly unchanged (Chile) since mid-2011, when the European financial distress intensified. In Chile and Mexico, the decline was driven by non-Spanish European banks, which reduced their exposure to the region (mostly cross-border claims). However, claims by non-European banks declined by much less in Brazil and Mexico, and even rose sharply in the case of Chile. In all three cases, the share of claims by non-European banks in the region is up since late 2011.
Consolidated Claims by Foreign Banks on Local Residents
(US$ billions)
Sources: BIS; and IMF staff calculations.Subsidiaries’ local claims (Figures 2 and 3): Domestic bank credit data suggest that claims by subsidiaries of foreign banks declined somewhat since 2008 in the three countries. The data also indicate that Spanish subsidiaries (for which data were readily available) have been more cautious than domestic banks. For example, in 2012, credit by Spanish subsidiaries grew at a slower pace than the rest of the banking system in all three countries, with other banks (particularly domestic banks) increasing their market share. In relation to equity prices, the performance of Spanish bank subsidiaries (in Brazil and Chile, where they are publicly traded) has lagged slightly behind that of other banks since 2011:Q3.
Credit Composition
Source: National authorities.Domestic Credit Growth (y/y): 2010:Q1–2012:Q3
Source: National Authorities.Asset sales. Another mechanism to reduce exposure to the region has been the sales of assets. Public data suggest that from 2008 to 2012, Spanish banks shed asset holdings in the region for a combined total of US$7 billion (less than 2 percent of total claims of Spanish banks in the three countries). In addition, one of the Spanish subsidiaries raised US$4.1 billion in equity in December 2012 by issuing an IPO equivalent to 25 percent of its Mexico operations. Although large relative to the size of domestic markets, these operations have had a limited impact on the stability of financial markets as the deleveraging process has been orderly.
Note: This box was prepared by Nicolas E. Magud, Anayo Osueke, and Yi Wu.Foreign Ownership of Local Currency Securities and Exchange Rate Flexibility
Low interest rates in advanced economies and stronger fundamentals in emerging economies have increased the relative attractiveness of emerging market assets, most of which are not denominated in U.S. dollars. In recent years, countries in Latin America as well as in other emerging economy regions have seen a sharp increase in foreign investor participation in their local-currency denominated securities market. In Latin America, the share of foreign ownership of government securities has doubled from an average of about 12 percent in early 2008 to more than 25 percent by end-2012. Similar increases have been observed in other emerging regions.
The marked increase in foreign ownership of debt securities has put policymakers on alert, in part because foreign investors are perceived to be more likely to sell their holdings in the event of a sudden reversal in global sentiment. In fact, during the six months following the Lehman crisis, foreign holdings of emerging markets’ domestic securities fell by close to US$70 billion (from 15 percent to under 10 percent of total holdings), exerting pressure on currencies and pushing bond yields higher (Figure 1).
Selected EMs: Nonresidents’ Holding Domestic Public Debt1
Sources: Haver Analytics; national authorities; IMF, World Economic Outlook; and IMF staff calculations.1 Shaded areas are periods where VIX increased by at least 15 points over a quarter. EM includes Brazil, Colombia, Hungary, Indonesia, Korea, Malaysia, Mexico, Peru, Poland, Thailand, and Turkey.2 Calculated as simple average.However, the magnitude and speed of the selloff of domestic debt securities during periods of global financial stress, such as Lehman, can differ substantially across countries. It depends, among other things, on economic fundamentals, the degree of financial openness, and especially, the degree of exchange rate flexibility. In fact, a simple event analysis around Lehman suggests that countries with greater exchange rate flexibility appear to have experienced, on average, a smaller reduction in foreign investors’ holdings of debt securities (Figure 2). This suggests that foreign investors who experienced a sudden sharp drop in the U.S. dollar value of their assets were less likely to exit than investors in countries where currencies did not depreciate as sharply. Conversely, the data show that since March 2009, the countries that experienced the largest increase in foreign investor holding of domestic debt were those with a relatively more stable exchange rate. Overall, the evidence suggests that exchange rate flexibility reduces the vulnerability to sudden changes in foreign investors of domestic debt.
Selected EMs: Change in Foreign Ownership of Public Debt and Exchange Rate Flexibility
Sources: Bloomberg, L.P.; Haver Analytics; national authorities; IMF, International Financial Statistics; and IMF staff calculations.1 Cumulative changes in foreign ownership measured in local currency.2 Exchange rate volatility is normalized measure of standard deviation (coefficient of variation) of the nominal exchange rate for each subperiod.Sustaining Progress in Banking Regulation and Supervision in Latin America
Recent Financial System Stability Assessments (FSSA) reports suggest that the region’s more financially integrated economies (Brazil, Chile, Colombia, Mexico, and Peru) have made good progress toward adopting international regulatory financial standards.1 Banking supervision is not only highly compliant with Basel’s Core Principles for Effective Banking Supervision, but it is also more sophisticated, comprehensive (that is, requiring a closer and deeper knowledge of the supervised entity), and risk-based than in the past. Prudential regulations and requirements are generally adequate. Capital levels are high (in most cases exceeding Basel III’s new minimum requirements), liquidity is ample, and leverage is low; and banks are profitable. Moreover, stress tests conducted under the FSSA suggest that banks in most countries would withstand extreme adverse shocks (for example, severe global recession, reversal of capital inflows, and terms-of-trade shocks).
Notwithstanding these favorable assessments, important challenges remain for the region’s banking systems.
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On the supervision side, key pending tasks are to strengthen the legal protection and independence of bank supervisors, and improve consolidated and cross-border supervision to limit potential large exposures or related party lending.
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On the regulation front, while capital levels are ample, it is important to improve their quality and transparency in line with Basel III (see figure), to ensure that banks have sufficient loss-absorption capacity. Some countries are already moving in this direction. Mexico recently adopted, ahead of schedule, Basel’s III standards for capital requirements (including the capital conservation buffer, but not the countercyclical capital buffer), although liquidity requirements are currently under observation (to allow regulators to assess their impact). In Brazil, consultations are currently under way for the phase-in of Basel III, which will include countercyclical capital buffers and a surcharge for systemically important banks. Other financially integrated economies in the region appear to be well placed to conform to Basel III’s capital and liquidity requirements by 2015.
Basel III: Improving the Definition of Capital
(Percentage points over risk-weighted assets)
Source: BCBS.Note: SIFI stands for systemically important financial institution.Beyond banks, there is a need in some countries to strengthen the oversight and regulation of nonbank financial entities and/or large corporates. Easy external financing conditions are making it easier and cheaper for firms to borrow outside the banking system, whereas compliance with tighter Basle III regulations will likely constrain banks’ ability to finance some projects. Addressing these issues will require:
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Strengthening oversight within the existing regulatory perimeter for nonbank entities. The recent intervention and liquidation of a large broker dealer in Colombia made evident weaknesses in regulatory standards (for example, liquidity and related party lending through financial conglomerates).
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Extending the regulatory perimeter and strengthening supervision to include nonbank financial institutions. For instance, in Chile, the rapid expansion of electronic payments has led the authorities to establish a new set of regulations for credit cards, which requires issuers and operators to have strong solvency, liquidity, risk management, and information disclosure standards.
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Improving banks’ risk management practices, and ensuring that informational asymmetries (for example, shortlived credit histories, weak accounting practices of smaller firms) do not result in the new sources of vulnerabilities.
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Strengthening the oversight of larger firms, including identifying potential currency and maturity balance sheet mismatches. These efforts should be complemented with (i) the creation of comprehensive credit registries with credit information from both banks and other credit providers (including department stores); and (ii) the strengthening of corporate governance rules to protect bondholders and shareholders and allow the healthy development of corporate bond and equity markets. The latter will require improving the quality, timeliness, and disclosure of information of firms (for example, on internal controls, risk management policies, and the nomination and compensation of boards).
The Caribbean: In Search of Lost Competitiveness
Over the past two decades, the Caribbean region has experienced relatively low growth, largely as a result of deep-rooted competitiveness problems. These have translated into large external current account deficits, high levels of external debt and, more generally, unsustainable external positions. Meanwhile, attempts by the public sector to support flagging growth came at a high fiscal cost and led to unsustainable debt dynamics. In light of this, the region faces a conundrum: how to bolster growth in a weak external environment at a time when fiscal retrenchment has become imperative. One way to tackle this conundrum is to focus on improving competitiveness. This box discusses the available policy options, taking into account that many countries in the region are under fixed exchange rate regimes.
Real GDP
(Indexes, 1990 = 100)
Sources: IMF, World Economic Outlook; and IMF staff calculations.There are three main ways to improve competitiveness and reduce relative domestic costs: (i) a fiscal adjustment to bring domestic inflation below that of major trading partners (internal devaluation); (ii) a nominal depreciation (external devaluation); and (iii) structural reforms to boost private investment and productivity.1
Structural Reforms. Structural reforms should be pursued vigorously regardless of other policies. These should focus on: (i) improving the effectiveness of public investment, which has had relatively low returns; (ii) improving the ease of doing business and the overall investment environment, including through lower regulatory burdens and more efficient public services; (iii) increasing efficiency and reducing costs in the product, labor and financial markets, including through reformed labor relations, electricity market reforms, and phasing out of administered interest rate floors; and (iv) pursuing deeper regional integration to help overcome size-related disadvantages.
Internal or external devaluation? The choice between the remaining two policy options—external and internal devaluation—is difficult, because both may entail adverse macroeconomic effects. Moreover, in small open economies, the balance between the positive and negative effects of the two options differs from those in larger economies, because of their high degree of trade openness. To better understand this balance, IMF staff has conducted event studies as well as simulations of dynamic stochastic general equilibrium (DSGE) models calibrated for small open economies. The main results of these analyses are:
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Fiscal adjustment (internal devaluation). Model-based simulations and case studies provide some evidence that an internal devaluation may be effective in boosting competitiveness in Caribbean economies. Fiscal consolidation produces a real depreciation, which helps correct external imbalances. In line with recent country experiences with internal devaluations (Barbados, 1991; Hong Kong, 1997; and Argentina, 1998), the model predicts that smaller states will experience a smaller real depreciation than larger ones, but a larger current account improvement (because of the higher import content of cuts in government spending and the sheer size of the import bill). Although there are some expected short-term losses in output from reduced demand, these tend to be smaller in smaller states (where the share of imports in government spending tends to be larger). The simulations thus confirm that fiscal multipliers are lower in smaller states, implying that the contractionary effects of a fiscal adjustment will be smaller than in larger economies.
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External devaluation. Model simulations also suggest that external devaluations will help boost competitiveness and increase growth, though these effects tend to be smaller in small states. Model-based simulations and the experience following 83 large devaluation episodes since 1975 (of which 24 in small states) suggest that (i) growth and the external position improve immediately following the devaluation for both large and small economies; (ii) the real depreciation appears to be lower in small states because domestic prices rise more, reflecting the larger import content of their consumption basket; and (iii) the gains in output will not be as notable in small states because of the smaller decline in relative costs. The event studies also show that in addition to being small, countries undergoing financial crises or experiencing substantial reserve pressures had lower gains from devaluations.
For the Caribbean, the choice between internal and external devaluations is made easier because most countries have to undertake significant fiscal adjustments to improve their debt dynamics, which will also help improve competitiveness. Should an additional external adjustment be needed, external devaluations can be used, although they are not expected to be as effective as in larger and less open economies. To improve the likelihood that they would have an expansionary effect, external devaluations should be undertaken together with measures to boost confidence that further devaluations would not be needed, such as structural reforms and fiscal adjustment.
Note: Prepared by A. Cebotari, based on Acevedo and others (2013). For a recent assessment of competitiveness in the Caribbean, see the April 2012 Western Hemisphere Regional Economic Outlook (Box 2.5). 1 A fourth option would be a fiscal devaluation (a revenue-neutral tax shift from payroll taxes to consumption-based taxes to reduce unit labor costs and consumption); this option would be difficult to implement in the Caribbean.This group, which represents close to 75 percent of the region’s output, includes Brazil, Chile, Colombia, Mexico, Peru, and Uruguay.
Brazil eased some of its capital flow restrictions in the second half of 2012 as portfolio flows subsided.
This group includes Argentina, Bolivia, Ecuador, Paraguay, and Venezuela. In the case of Argentina, the IMF issued a declaration of censure, calling it to adopt remedial measures to address the quality of the official GDP and Consumer Price Index for Greater Buenos Aires (CPI-GBA) data. In this report, alternative data sources are also used in some cases for the assessment of developments.
Bolivia and Paraguay recently issued sovereign debt at historically low rates.
Many countries in the region (Costa Rica, El Salvador, Guatemala, and Honduras) have issued sovereign debt at relatively low rates in recent months. The easing of external financing constraints could increase external and fiscal vulnerabilities if it relaxes fiscal discipline.
In the case of Trinidad and Tobago, maintenance work in the energy sector held back growth in 2012.
St. Kitts and Nevis reached an agreement in 2012 with external creditors to reduce the face value of debt by about 6 percent of GDP. Other debt restructurings in recent years include Antigua and Barbuda (2011) and Jamaica (2011). Haiti received official debt relief following the devastating earthquake of early 2011.
