24 April 2006
Reports Find Strong Economic Growth in Latin America, Caribbean
Current climate, past progress offer chance to address enduring issues, IMF says
Washington -- Latin American and Caribbean economies are performing strongly and the region’s governments should continue to implement sound macroeconomic policies and reforms to sustain and strengthen economic growth, according to Anoop Singh, the director of the Western Hemisphere Department at the International Monetary Fund (IMF).
In an April 21 press conference, Singh commented on the IMF’s Spring 2006 update of the economic situation in Latin America and the Caribbean as well as the outlook for the region. The IMF official said the region’s economies have exceeded earlier growth projections, expanding the “robust rate” of 4.25 percent growth in 2005 -- a quarter percentage point more than the IMF projected. Singh said that poverty and unemployment indicators also have shown improvements in many countries in the region.
The IMF official indicated that a favorable global economic climate, including strong prices for exports of commodities and raw materials, played a key role in the region’s robust economic performance. He added that improved macroeconomic policies have also benefited the region. Monetary policymakers in particular were successful in controlling inflation, reflecting a strong regional commitment to price stability, Singh said.
Given the favorable global economic situation and a generally strong policy environment in the region, the IMF official said that the near-term prospects for Latin America and the Caribbean are good. Singh also said the current economic climate represents an important opportunity for the region to address persistent problems.
“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 to move decisively further in addressing vulnerabilities from low growth, poverty, and inequality,” Singh said. “This would pave the way for raising productivity and the growth potential in the region over the medium term, and better meeting the increasingly urgent social aspirations of the population.”
As Latin America and the Caribbean look to build on accomplishments in monetary and fiscal policy and seize the opportunity before them, Singh said, the region must continue to strengthen macroeconomic institutions and ensure that spending increases are both targeted to social and physical infrastructure development and consistent with efforts to reduce debt levels.
Looking ahead to building medium-term growth potential, Singh said that more efficient investment in the region will be needed and that regional efforts to bolster productivity must continue.
As part of this process, the IMF official said, priorities should include improvements to the region’s business climate and efforts by financial institutions to expand access to credit. Reforms that strengthen regulatory frameworks and facilitate flexibility and competition are an important part of this agenda, he said, citing labor reform that provides flexibility as measure that could contribute to continued employment growth.
Even though the strengthening of policies throughout the region has greatly improved its resilience against international shocks compared with the situation at the start of the decade, Singh called on Latin American and Caribbean government’s to work to build on this progress.
“To sustain and further strengthen growth, and to insure economies against global risks, the priority is for governments to persevere with stable macroeconomic policies and press ahead with structural reforms that remove barriers to investment and growth,” he said.
A transcript of Singh’s press conference is available on the IMF Web site, as is full text of the report, Western Hemisphere Regional Economic Outlook 2006 Midyear Update.
For information on U.S. policy in the region, see Global Development and Foreign Aid.
(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
