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Risk of Latin American Economies Overheating

Tuesday, January 25th 2011 - 01:28 UTC
Full article 8 comments
IMF boss John Lipsky (Photo:Reuters) IMF boss John Lipsky (Photo:Reuters)

The International Monetary Fund (IMF) has warned of the risks of inflation and overheating of the economy in Latin America, at a forum held in Paris.

“Inflation is already higher than expected in several emerging economies,” said Deputy Managing Director John Lipsky at the meeting organised by the Organisation for Cooperation and Economic Development (OECD) and the Inter-American Development Bank (BID).

“The high prices of raw materials and the increase in food have added complexity to perspectives, because inflation and its expectations are beginning to increase,” added Lipsky.

“Emerging economies need to keep overheating under control and at the same time take advantage of low international interest rates and in some cases, exploit income from raw material exports,” he added.

At the forum’s closing Lipsky also said: “Emerging economies have represented the driving force of the post-crisis global expansion: strong domestic demand — buoyed by an accommodative policy stance and renewed inflows of foreign capital — has powered a very robust recovery, even providing some boost to advanced economies.,”

However, he warned that despite the pace of growth, future economic expansion faced three downside risks.

“The links between financial stresses and fiscal sustainability —especially in the euro area — have the potential to undermine growth,” he said.

“The lack of progress in formulating credible medium-term fiscal consolidation plans in many advanced economies, that could weaken confidence and push up long-term interest rates; and high commodity and food prices, that could undermine macroeconomic stability and trigger social and political strains in developing countries.”

Lipsky said advanced economies did not have much policy room to manoeuvre to secure faster growth via shifts in domestic macroeconomic policies.

”Other countries (excluding the US) either have no room for further fiscal expansion, or they are being pushed by financial market pressures to tighten budget policies immediately. In this context, accommodative monetary policies in advanced economies so far have been welcome and appropriate,” he said.

 

 

 

Categories: Economy, Politics, Latin America.

Top Comments

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  • I

    http://www.gregpalast.com/el-actual-ganador-del-premio-nobel-en-economia/
    IMF?? didn't this people ruin Argentina by giving corrupt leader loans that in 2001 Argentina couldn't pay ?? what happend ?? are they trying to give us more money or trying to sell us an idea to make IMF wealthy and Argentina even poorer then they left it in the 1970's ?? before IMF Argentina was known as the land of the bread an meat, this morning there is a report on Argentina's increasing poverty rate, without IMF Argentina's economy grew, lets not be stupid and get into debt, doesn't Argentina have their own bank, money supply and fees on foreign exchange ?? I don't think Latin America should be worryed this are just IMF scare tactics, we should be wary of foreigners and their exploitation of non renewhable resources and the damage to the local environment..
    http://www.gregpalast.com/el-actual-ganador-del-premio-nobel-en-economia/

    Jan 25th, 2011 - 08:19 am 0
  • J.A. Roberts

    Always someone else's fault in Argentina. The truth is the only people who have ruined Argentina are your own leaders. The ones you elected...

    Jan 25th, 2011 - 09:58 am 0
  • yul

    who care IMF !
    the most unsuccesful,stupid,unuseful...institution which has been
    in human history...

    open IMF web site.!...open IMF web site !.......open IMF web site..!..
    see it's trying fake countries....Djibouti...Israel...Gambia......

    don't smile on please....

    Jan 25th, 2011 - 11:15 am 0
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