“This is an exciting time for Latin America, which has been stretching and renewing itself economically, politically, and socially in recent years,” Lagarde stated December 5 in Santiago, Chile.
She made her remarks at the start of a two-day, high-level conference in Santiago, where policymakers and stakeholders from Latin America and the Caribbean will discuss possible remedies to support growth and financial stability in the entire region.
Lagarde, noting the recent shift in economic conditions that could worsen underlying vulnerabilities in the region, said that the conference presents a timely opportunity to discuss the recent challenges facing Latin America. “At this critical moment, it is more important than ever to foster growth that is inclusive, balanced, and sustainable,” she added.
Her visit to Chile was preceded by a visit to Peru, where she met with government officials to discuss economic developments and also to follow-up on the preparations for the next IMF–World Bank Annual Meetings, which will be held in Lima in October 2015.
Bumpy road ahead
During the past two decades, Lagarde stated that most countries in Latin America scored a “policy hat-trick” in the form of low inflation, fiscal discipline, and financial stability. She observed that these economies thrived because of their sound policy frameworks, rising commodity prices, and favorable global financial conditions.
So while other regions were struggling, Latin America weathered the 2008 global financial crisis with “quiet confidence” and made huge progress in reducing poverty and inequality. “Average real incomes have risen by more than 25 percent since 2000 and extreme poverty has been cut in half,” Lagarde said.
Despite these impressive economic and social achievements, Lagarde warned that the road ahead looks increasingly bumpy as global economic and financial conditions shift. Commodity prices, which lifted the region for more than a decade, are falling, and the era of easy dollar financing will end before long.
Lagarde also mentioned that some countries in Latin America are facing underlying vulnerabilities and others are pushing up against capacity constraints.
“This underscores the need for...