Corruption in Latin America: A Way Forward

By David Lipton, Alejandro Werner, and S. Pelin Berkmen

September 28, 2017

Versions in Español (Spanish),  Português (Portuguese)

Sustained action on many fronts will be needed to push countries out of the corruption trap (photo: People Images/iStock). 

In our first blog of this two-part series, we noted that, despite recent progress, corruption in Latin America is still high. In this second blog, we look at measures to fight corruption that have worked well in other countries. Learning about these policies can provide insights to guide Latin America in the design of their anti-corruption strategies, even if the final shape of these policies will differ depending on country specifics. Continue reading “Corruption in Latin America: A Way Forward” »

Chart of the Week: High Hurdles for Trade in Services

By IMFBlog

September 25, 2017

A shop window in Stockholm, Sweden: 62 % of jobs in the country are in the services sector (photo: Bob Strong/Reuters/Newscom).

The service sector accounts for some two-thirds of economic activity, and roughly the same share of jobs around the world. And yet the barriers to trade in services—from banking to online consultations with doctors or engineers—remain high.

Continue reading “Chart of the Week: High Hurdles for Trade in Services” »

Corruption in Latin America: Taking Stock

By  David LiptonAlejandro Werner, Carlos Gonçalves

September 21, 2017 

Versions in Español (Spanish)  Português (Portuguese)

Systemic corruption drains public resources and drags down economic growth (photo: People Images/iStock).

Corruption continues to make headlines in Latin America. From a scheme to shelter assets leaked by documents in Panama, to the Petrobras and Odebrecht scandals that have spread beyond Brazil, to eight former Mexican state governors facing charges or being convicted, the region has seen its share of economic and political fallout from corruption. Latin Americans are showing increasing signs of discontent and demanding that their governments tackle corruption more aggressively.

Continue reading “Corruption in Latin America: Taking Stock” »

Latest Outlook for The Americas: Back on Cruise Control, But Stuck in Low Gear

By Alejandro Werner

July 25, 2017

Versions in Español (Spanish), Português (Portuguese)

Shopping mall in Viña del Mar, Chile: Latin America is expected to recover gradually as most economies continue to face weak domestic demand (photo: Rodrigo Garrido/Newscom)

After disappointing growth over the past few years, economic activity in Latin America remains on track to recover gradually in 2017–18 as recessions in a few countries—notably Argentina and Brazil—are coming to an end. Our latest projections show the region growing by 1 percent in 2017 and 1.9 percent in 2018.

But amid low confidence, domestic demand continues to remain weak across most economies, and is expected to only recover slowly as actual output catches up to potential and internal sources of growth build strength, based on a decline in political and policy uncertainty across some major economies. Some countries in the region will need clear strategies to adjust further following a permanent loss in commodity revenues. Continue reading “Latest Outlook for The Americas: Back on Cruise Control, But Stuck in Low Gear” »

Redesigning Argentina’s Economic Landscape

By Roberto Cardarelli

Versions in Português (Portuguese), and Español (Spanish)

Most people know Argentina as the land of tango, Malbec, and some of the greatest soccer players of all times. But Argentina is also famous for being home to some of the most diverse and extreme landscapes of the world—from subtropical rainforests and Iguazu Falls in the north to the glaciers of Perito Moreno in the south, and from the lowest site in South America (Laguna del Carbón) to the highest elevation in the Americas (Aconcagua mountain).

Continue reading “Redesigning Argentina’s Economic Landscape” »

In Transition: The Outlook for Latin America and the Caribbean

Event onlyBy Alejandro Werner

Versions in: Português (Portuguese),  Español (Spanish)

Following a rough start at the beginning of the year, both external and domestic conditions in Latin America and the Caribbean have improved. But the outlook for the region is still uncertain.

Commodity prices have recovered since their February 2016 trough, but they are still expected to remain low for the foreseeable future. This has been accompanied by a brake—or even a reversal—in the large exchange rate depreciations in some of the largest economies in the region.

Continue reading “In Transition: The Outlook for Latin America and the Caribbean” »

Rising Latin American Corporate Risk: Walking a Tightrope

By Carlos Caceres and Fabiano Rodrigues Bastos

Versions in Português (Portuguese) and Español (Spanish)

The rapid increase in Latin American corporate debt—fueled by an abundance of cheap foreign money during the past decade—has contributed to an increase in corporate risk. Total debt of nonfinancial firms in Latin America increased from US$170 billion in 2010 to US$383 billion in 2015. With potential growth across countries in the region slowing, in line with the end of the commodity supercycle, it will now be more difficult for firms to operate under increased debt burdens and reduced safety margins.

In this environment, Latin American firms are walking a tightrope. With external financial conditions tightening, the walk towards the other side—notably through adjustment and deleveraging—while necessary, has become riskier. After making good progress, the crossing has also become more perilous due to strong headwinds—including slower global demand and bouts of heightened market volatility.

Continue reading “Rising Latin American Corporate Risk: Walking a Tightrope” »

Unemployment: Troubles Ahead for Emerging Markets

By Prakash Loungani and Zidong An

Version in Español (Spanish)

Forecasts of real GDP growth attract a lot of media attention. But what matters more to the person on the street is how growth translates into jobs. Unfortunately, the mediocre growth outlook of recent years may lead to a disturbing outlook for jobs, particularly among fuel-exporting countries and in the Latin America and Caribbean region.

Continue reading “Unemployment: Troubles Ahead for Emerging Markets” »

The Price of Oil and the Price of Carbon

By Rabah Arezki and Maurice Obstfeld

(Versions in عربي中文Français日本語,  Русский, and Español)

“The human influence on the climate system is clear and is evident from the increasing greenhouse gas concentrations in the atmosphere, positive radiative forcing, observed warming, and understanding of the climate system.”Intergovernmental Panel on Climate Change, Fifth Assessment Report

Fossil fuel prices are likely to stay “low for long.” Notwithstanding important recent progress in developing renewable fuel sources, low fossil fuel prices could discourage further innovation in and adoption of cleaner energy technologies. The result would be higher emissions of carbon dioxide and other greenhouse gases.

Policymakers should not allow low energy prices to derail the clean energy transition. Action to restore appropriate price incentives, notably through corrective carbon pricing, is urgently needed to lower the risk of irreversible and potentially devastating effects of climate change. That approach also offers fiscal benefits.

Continue reading “The Price of Oil and the Price of Carbon” »

By | December 2nd, 2015|Economic research, growth, International Monetary Fund, Reform|

Bad Debt in Emerging Markets: Still Early Days

by John Caparusso, Yingyuan Chen, Evan Papageorgiou and Shamir Tanna

(Versions in 中文, PortuguêsРусский, and Español)

Emerging markets have had a great run. The fifteen largest emerging market economies grew by 48% from 2009 to 2014, a period when the Group of Twenty economies collectively expanded by 6%.

How did emerging markets sustain this growth? In part, they drew upon bank lending to drive corporate credit expansion, strong earnings, and low defaults. This credit boom, combined with falling commodity prices and foreign currency borrowing, now leaves emerging market firms vulnerable and financial sectors under stress, as we discuss in the latest Global Financial Stability Report.

Continue reading “Bad Debt in Emerging Markets: Still Early Days” »

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