[News] IMF says recovery in Latin America will be mild and will have various speeds

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According to its forecasts, Latin America will grow in 2021 at a rate of 4.6%, half a point above the January forecast.

The economic recovery in Latin America and the Caribbean will be "slight" compared to other regions of the world and will have "various speeds", with large differences between exporting countries and those dependent on tourism, the International Monetary Fund (IMF) stressed on Tuesday.

"After a sharp decline in 2020, only a mild, multi-speed recovery is expected in Latin America and the Caribbean in 2021," the Fund noted in its new Global Economic Outlook (WEO) report.

According to its forecasts, Latin America will grow in 2021 at a rate of 4.6%, half a point above the IMF forecast for January.

"Much to do" in Argentina"
In their analysis, the experts explain that the expected development for this year is largely due to the growth of the region's large exporting countries, such as Argentina, Brazil and Peru, which have been positively impacted by the rebound in world manufacturing in the second half of 2020.

However, the Fund's chief economist, Gita Gopinath, assured that "much remains to be done" for the macroeconomic stabilization of Argentina, one of the countries that currently has a rescue program from the multilateral organization.

"Argentina faces very important challenges, since inflation is very high" and "it is not very clear yet" how this indicator will evolve. For this reason, "much remains to be done in terms of macroeconomic stabilization," Gopinath said at the press conference presenting the IMF report.

The reality is that foreign trade in Latin America had its worst performance in 2020 since the Great Recession (2008), collapsing 13%, but the drop was 10 points less than expected due to the rebound in demand in the main partners of the region, especially China, according to a study by the Economic Commission for Latin America and the Caribbean (ECLAC).

The three major economies of Latin America, Brazil, Mexico and Argentina, will grow this year 3.7%, 5%, and 5.8%, respectively, according to the IMF.

 

Brazil and Mexico, benefited by the US stimulus.
Regarding the main economies of the region, Gopinath and the deputy director of the IMF's Research Department, Petya Koeva Brooks, argued that the Brazilian and Mexican economies will be one of the “main beneficiaries” of the fiscal stimulus package launched by President Joe Biden. In U.S.A.

"Mexico will be one of the main beneficiaries of the rescue package of 1.9 trillion dollars of the Biden Administration," Gopinath said in this regard, after Brooks, also present at the press conference, affirmed the own of Brazil.

Despite the positive impact of the US fiscal stimulus, Gopinath considered that Brazil's priority should be vaccination, the rate of which "should be much higher than the current one."

In this regard, the IMF also warns in the report that the longer-term prospects "continue to depend on the trajectory of the pandemic."

"With some exceptions - such as Chile, Costa Rica, Mexico - most of the countries have not obtained enough vaccines to cover their po[CENSORED]tions," the multilateral organization highlights in its document, which analyzes the economic outlook for the entire world.

 

The Caribbean continues to be affected by little tourism
Beyond the large economies of the region, the IMF revised down the 2021 projections for the Caribbean region, highly dependent on tourism, one of the sectors most affected by the coronavirus pandemic globally.

Thus, the Fund cut its forecast for the Caribbean by 1.5 points, to 2.4%.

Other Latin American countries, such as Colombia, Chile and Peru, will advance 5.1%, 6.2%, and 8.5%, respectively.

On the contrary, Venezuela will suffer an economic contraction of 10%.

The IMF is holding its spring meeting this week with the World Bank, again virtually due to the pandemic, in which economic leaders will discuss the main global challenges.