MercoPress. South Atlantic News Agency

IMF economic outlook influenced by Wall Street, claims World Bank

The World Bank believes that the IMF growth prospects for Latinamerica are “too pessimistic” and anticipates the region will suffer a milder contraction 0.6%, compared to the 1.5% forecasted by the April World Economic Outlook which IMF released Wednesday.

According to those prospects the global economy will contract 1.3% and Latinamerica will suffer a recession and will only begin to grow, 1.6%, in 2010. The percentage is also lower than the World Bank’s 2.2% recovery forecast.

Regarding individual countries differences are also evident: IMF anticipates México will contract 3.7% this year, but for the World Bank it will only be 2%. In 2010 growth will be 1.8% for the bank but only 1% for the IMF.

World Bank chief economist for Latinamerica Augusto de la Torre described the situation as a consequence of “bifurcation of perceptions” between analysts in Wall Street and those in the region.

Wall Street is “more negative” and the economists from the IMF “seem to be looking at the evolution of events with eyes from the centre”, instead of the periphery. Anyhow he admitted that prospects are difficult to elaborate and recalled the collapse of Lehman Brothers last September.

De la Torre said that the region is less vulnerable in this occasion, than in previous situations and underlined that a “regional financial systemic crisis is out of the question”. He added however that the word “crisis”, traditionally linked to financial disasters, will not happen this time in the region.

But the region is “socially” vulnerable, which means four million Latinamerican could again fall into poverty this year because of the global recession, plus another two million that will remain stalled in that condition, which would have not happened without the crisis.

It is estimated that 60 million Latinamerican moved away from poverty between 2002 and 2008.