|Matthew Rutledge photo|
Two years after the onslaught of the global financial crisis, some countries in the Western Hemisphere are growing at a pace that is second only to emerging Asia, according to the latest Regional Economic Outlook from the International Monetary Fund.Growth in many economies appears to be self-sustained and based on robust domestic demand, meaning their near-term prospects are positive even if recovery in advanced economies continues to be sluggish, says the IMF's Western Hemisphere: Heating up in the South, Cooler in the North, which was launched today in Bogotá in a seminar hosted by the Central Bank of Colombia.
Real GDP in the Latin America and Caribbean region is set to expand by 5.7 percent in 2010 and 4 percent in 2011, the report finds. Within the region, countries are performing at different paces, the IMF says. Most commodity-exporting countries in South America enjoy very favorable external conditions – high international commodity prices and easy access to international finance – and growth in some countries is projected to exceed 7 percent this year, according to the report. Central American economies have kept a positive, but more moderate rate of growth (averaging about 3 percent in 2010), reflecting their greater linkages to the slower-growing U.S. economy, it says. The report finds that, for most Caribbean countries, recovery is only beginning and prospects are still limited by high levels of public debt and weak tourism demand from the U.S. and other advanced economies.
"The marked heterogeneity across the region means varied challenges for economic policy formulation," Nicolas Eyzaguirre, director of the IMF’s Western Hemisphere Department, said. "For most of South America, it is all about the risks of too much of a good thing, to avoid possible excesses of demand and finance. In Central America, governments have to continue to be prudent, to rebuild their defenses and continue pursuing reforms to boost competitiveness. Caribbean countries generally have no space for fiscal stimulus due to their high debts and still have to push ahead with fiscal consolidation plans."