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IMF / LATIN AMERICA ECONOMIC OUTLOOK
STORY: IMF / LATIN AMERICA ECONOMIC OUTLOOK
TRT: 3.21
SOURCE: IMF
RESTRICTIONS: NONE
LANGUAGE: ENGLISH / SPANISH / NATS
DATELINE: 18 OCTOBER 2010, WASHINGTON
RECENT 2010, WASHINGTON D.C.
1. Wide shot, exterior IMF HQ
18 OCTOBER 2010, WASHINGTON D.C.
1. Various shots, Nicolas Eyzaguirre working at his desk
2. SOUNDBITE (English) Nicolas Eyzaguirre, Director, Western Hemisphere Department, IMF:
“Latin America is performing very well. Growth is going to be close to 6 percent this year, so basically erasing the previous bad years. It has been pushed to a big extent by very good external conditions, export prices, and very loose financial conditions, but at the end that has factored in a very robust growth of domestic demand.”
FILE / RECENT 2010, LIMA, PERU
3. Various shots, construction workers
18 OCTOBER 2010, WASHINGTON D.C.
4.SOUNDBITE (Spanish) Nicolas Eyzaguirre, Director, Western Hemisphere Department, IMF:
“The key challenges for the region are not only taking advantage of growth opportunities, but also to guarantee the growth for the medium and long term. In that sense, it would not be wise to take advantage of the external conditions which have led to a drive in internal demand in order not to leave any savings for the future. Effectively, economies are growing fast, but are also running the risk of growing too fast. The contribution of the region towards a worldwide balance has been good because they have tolerated an appreciation of their money, and consistent with the high growth rates, exports are growing faster.”
FILE / RECENT 2010, LIMA, PERU
5. Wide shot, traffic scene
6. Med shot, officer directing traffic
18 OCTOBER 2010, WASHINGTON D.C.
7. SOUNDBITE (Spanish) Nicolas Eyzaguirre, Director, Western Hemisphere Department, IMF:
“The abundant inflows of capital arriving to the region constitute without doubt an opportunity because they allow governments and the private sector to have a better debt structure. It also allows financing for investment which they couldn’t otherwise. However, they run the risk of eventually producing an excess and a credit boom that afterwards could bring instable consequences towards that region. That’s why the countries have to put in place a group of policies for this new global situation that would allow for sustainable future growth.”
FILE / RECENT 2010, LIMA, PERU
8. Various shots, banks
18 OCTOBER 2010, WASHINGTON D.C.
9. SOUNDBITE (English) Nicolas Eyzaguirre, Director, Western Hemisphere Department, IMF:
“In the Caribbean the situation as compared to the rest of Latin America, and especially South America, are quite different. Why is that? Because the Caribbean trade linkages are predominantly with the United States and some more advanced countries that are facing very lukewarm growth prospects therefore trade is not helping them. On top of that, there is very large public debt so they have not been able to benefit from the more easy credit conditions worldwide.”
RECENT 2010, WASHINGTON D.C.
10. Wide shot, Exterior IMF HQ
Latin American and Caribbean economies are recovering faster than anticipated, with the region expected to growth by more than 5½ percent in 2010, but the main challenge for policymakers remains ensuring a moderation in domestic demand to avoid overheating, the IMF said.
“Latin America is performing very well. Growth is going to be close to 6 percent this year, so basically erasing the previous bad years. It has been pushed to a big extent by very good external conditions, export prices, and very loose financial conditions, but at the end that has factored in a very robust growth of domestic demand,” said Nicolas Eyzaguirre, the Director of the IMF’s Western Hemisphere Department.
In its Regional Economic Outlook for the region, issued on October 19 in Bogotá, Colombia, the IMF said that, after posting impressive gains in the first half of 2010, growth in the region is projected to moderate somewhat during the remainder of this year, but remain above trend.
In Central America, the recovery is progressing more gradually after a sluggish start, while in the Caribbean, growth remains muted, following a severe contraction last year, the report said.
“The key challenges for the region are not only taking advantage of growth opportunities, but also to guarantee the growth for the medium and long term. In that sense, it would not be wise to take advantage of the external conditions which have led to a drive in internal demand in order not to leave any savings for the future. Effectively, economies are growing fast, but are also running the risk of growing too fast. The contribution of the region towards a worldwide balance has been good because they have tolerated an appreciation of their money, and consistent with the high growth rates, exports are growing faster”,
Eyzaguirre said.
But the timing and path of the recovery will vary among the region’s economies, depending on external influences and the legacy of their past policies and their policy frameworks, the IMF said.
The current global setting is stimulative for those economies with greater real linkages to the more dynamic emerging economies, and for those likely to be most attractive to foreign investors. Most commodity-exporting countries of South America are facing highly favorable conditions—particularly those with stronger fundamentals, who have easiest access to credit.
“The abundant inflows of capital arriving to the region constitute without doubt an opportunity because they allow governments and the private sector to have a better debt structure. It also allows financing for investment which they couldn’t otherwise. However, they run the risk of eventually producing an excess and a credit boom that afterwards could bring instable consequences towards that region. That’s why the countries have to put in place a group of policies for this new global situation that would allow for sustainable future growth”, Eyzaguirre said.
On the other hand, the environment is least favorable for those with strong real linkages to the weaker-performing advanced economies. This is the situation for many countries in Central America, with close ties to the U.S. economy, in terms of income from exports and workers’ remittances, and much more so for the tourism-dependent economies of the Caribbean.
“In the Caribbean the situation as compared to the rest of Latin America, and especially South America, are quite different. Why is that? Because the Caribbean trade linkages are predominantly with the United States and some more advanced countries that are facing very lukewarm growth prospects therefore trade is not helping them. On top of that, there is very large public debt so they have not been able to benefit from the more easy credit conditions worldwide,” Eyzaguirre said.
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