"Vigorous" outlook for Latin America

Pages325-329

Page 325

The economic recovery that began in 2002 in the Latin American and Caribbean countries should continue through at least 2007, according to the IMF's Regional Economic Outlook: Western Hemisphere. As a result, employment has been rising and poverty has been falling. Inflation is also expected to remain relatively low, testimony to the growing credibility of the region's central banks. The outlook was launched at the Latin American and Caribbean Economic Association meeting in Mexico City.

Page 328

IMF sees continued "vigorous expansion" in Latin America

Latin America has been growing rapidly, well above its historical average, with low inflation and rising employment, and is expected to continue on this favorable path next year, according to the IMF's Regional Economic Outlook:

Western Hemisphere, released in Mexico City on November 2.

Anoop Singh, director of the IMF's Western Hemisphere Department, told reporters that Latin American and Caribbean countries are experiencing "their most vigorous three-year expansion since the 1970s." In 2006, real growth is expected to average around 4¾ percent, about !/2 of 1 percentage point higher than in 2005. Growth is expected to recede slightly to about 4¼ percent in 2007, in line with a more measured global expansion, the likely easing of commodity prices, and the maturing of recoveries within the region (see Chart 1).

The ongoing recovery has led to rising employment rates and declines in poverty in a region that suffered severe economic dislocations in the final two decades of the 20th century.

The IMF said that during 2005 and the first six months of 2006, employment growth accelerated in many countries and unemployment fell toward 10 percent, on average.

The portion of the population living in poverty-which is defined in terms of the ability to purchase a basket of basic consumption goods-fell across the region from about 44 percent in 2003 to 40 percent in 2005, with sizable declines in South America's two biggest economies, Argentina and Brazil.

Speaking at the annual meeting of the Latin American and Caribbean Economic Association in Mexico City (see page 329), Singh emphasized that this expansion is more solid than earlier ones. Although there is regional variation, inflation has generally remained subdued and is expected to decline moderately...

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