Western Hemisphere: Seizing the moment

• Pages: 127

Page 127

The outlook for the United States, Canada, and Latin America and the Caribbean (LAC) is favorable, according to the IMF's April 2006 Regional Economic Outlook, which was released in Washington, D.C., on April 21 by Anoop Singh (Director of the IMF's Western Hemisphere Department). According to Singh, "the region is at an important historical juncture. The recent strong performance of the regional and global economy and the continuing generally favorable outlook provide a rare opportunity for policymakers in the region."

The report projects that growth in the United States and Canada will continue to provide key support for global expansion. U.S. growth is projected to remain close to 3 1/2 percent in 2006, with continued low core inflation and strong productivity growth. Growth in Canada is expected to pick up to just over 3 percent. The expansion of household demand should moderate somewhat in both countries, but healthy corporate profits and business investment should provide an offsetting boost to demand.

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Growth in the LAC region is expected to continue at a robust 4 1/4 percent in 2006, supported by strong commodity export prices, which have helped the region achieve current account surpluses for the third year in a row, as well as easy global financing conditions and record-low sovereign spreads.

Despite the rise in world oil prices and an acceleration in credit growth, inflation is expected to ease further to 5 1/4 percent in 2006 from 6 1/4 percent in 2005. The containment of inflationary pressures reflects strengthened commitments to price stability-in some cases supported by explicit inflation targets-and to greater exchange rate flexibility.

Fiscal positions have also continued to improve, with primary surpluses averaging 3 1/4 percent of GDP in 2005, compared...