Media Home
UN Web TV
UN PhotoUnifeed
IMF / LATIN AMERICA ECONOMIC OUTLOOK
STORY: IMF / LATIN AMERICA ECONOMIC OUTLOOK
TRT: 2.11
SOURCE: IMF
RESTRICTIONS: NONE
LANGUAGE: SPANISH / NATS
DATELINE: 3 MAY 2011, WASHINGTON DC
RECENT, WASHINGTON, DC
1. Wide shot, exterior IMF headquarters
3 MAY, 2011, WASHINGTON, DC
2. SOUNDBITE: (Spanish) Nicolas Eyzaguirre, Director, Western Hemisphere Department, International Monetary Fund (IMF):
“The main economic risk in the case of Latin America is basically complacency. The region is growing very fast, it grew very fast last year; it’s going to grow very fast as well this year, 2011. It’s growing a bit beyond its possibilities so if it does not begin to put the brakes on and continues at this pace the economy could eventually over-heat. When you’re over-heated it means basically that you’re exposed to a sudden reversal in any of the variables that are behind these favorable times like in terms of trade, commodity prices going down, or world interest rates going up.”
FILE / RECENT / LIMA, PERU
3. Various shots, construction workers building
3 MAY, 2011, WASHINGTON, DC
4. SOUNDBITE: (Spanish) Nicolas Eyzaguirre, Director, Western Hemisphere
Department, International Monetary Fund (IMF):
“It happens that in the recovery of the U.S. what has sort of taken the lead has been the industrial sector, while for instance, services or construction still lag behind. Mexico is more tied to industrial production in the U.S. than the rest of the economy so the trade linkages are not mitigating the recovery in Mexico and so we are experiencing high growth.”
RECENT, SAO PAOLO, BRAZIL
5. Various shots, fruit being stacked in supermarket
6. Med shot, man checking out in supermarket
3 MAY, 2011, WASHINGTON, DC
7. SOUNDBITE: (Spanish) Nicolas Eyzaguirre, Director, Western Hemisphere Department, International Monetary Fund (IMF):
“If they stay where they are now, I mean energy and food prices, they are already hurting the most vulnerable sectors of the population because, as you know, their consumption baskets are very intense in oil and food. So what we are recommending, given the limited fiscal resources that governments have, is that they should assist the most vulnerable sectors but in the most targeted possible way to avoid negative spillovers on inflation and on the fiscal accounts.”
RECENT, WASHINGTON, DC
8. Med shot, exterior IMF
Economic growth in much of Latin America remains strong, propelled by rising commodity prices, easy financing conditions, and stimulative policies. Growth exceeded 6 percent in 2010, and while it is projected to moderate to about 4¾ percent in 2011, the International Monetary Fund (IMF) says countries should remove the policy stimulus on a timely basis.
“The main economic risk in the case of Latin America is basically complacency. The region is growing very fast, it grew very fast last year; it’s going to grow very fast as well this year, 2011. It’s growing a bit beyond its possibilities so if it does not begin to put the brakes on and continues at this pace the economy could eventually over-heat. When you’re over-heated it means basically that you’re exposed to a sudden reversal in any of the variables that are behind these favorable times like in terms of trade, commodity prices going down, or world interest rates going up,” said Nicolas Eyzaguirre, Director of the Western Hemisphere Department of the IMF.
For the Unites States, the near-term outlook for growth has become somewhat more favorable, although new risks have emerged. A sharp and prolonged increase in oil prices could significantly slow the global recovery. In addition, the report states that the medium-term budgetary outlook remains troublesome and there is a need to reach early political consensus on a comprehensive and balanced fiscal consolidation plan.
As the US faces these risks, Mexico has benefited from growth in the industrial sector.
“It happens that in the recovery of the U.S. what has sort of taken the lead has been the industrial sector, while for instance, services or construction still lag behind. Mexico is more tied to industrial production in the U.S. than the rest of the economy so the trade linkages are not mitigating the recovery in Mexico and so we are experiencing high growth,” Eyzaguirre said.
Rising global prices of commodities, especially food, pose an important social challenge across the region. This applies even to countries that are net exporters of commodities and food, the report said.
To protect the poor, policies should focus on scaling up proven social safety net programs, such as targeted income transfers, school lunches, and child nutrition programs. Generalized price subsidies should be avoided as these measures are often very costly and regressive, and can turn out to be permanent—requiring large adjustments to other parts of the budget. The expansion of safety nets should take place within the established budget envelope, in some cases to avoid stimulating demand (South America), while in other cases to rebuild the policy buffers (Central America and Caribbean).
“If they stay where they are now, I mean energy and food prices, they are already hurting the most vulnerable sectors of the population because, as you know, their consumption baskets are very intense in oil and food. So what we are recommending, given the limited fiscal resources that governments have, is that they should assist the most vulnerable sectors but in the most targeted possible way to avoid negative spillovers on inflation and on the fiscal accounts,” Eyzaguirre said.
Download
There is no media available to download.
