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Road ahead for Latin America 'increasingly bumpy' says IMF Lagarde

Monday, December 8th 2014 - 07:12 UTC
Full article 6 comments
Commodity prices that lifted the region for more than a decade are now falling and the era of easy financing will soon end, said Lagarde. Commodity prices that lifted the region for more than a decade are now falling and the era of easy financing will soon end, said Lagarde.
Lagarde said Latam's middle class had grown 50% since 2003, partly because of a reduction in labor income inequality, including rising minimum wages. Lagarde said Latam's middle class had grown 50% since 2003, partly because of a reduction in labor income inequality, including rising minimum wages.

Latin America faces a rocky road ahead despite social and economic achievements in recent years, according to the head of the International Monetary Fund Christine Lagarde. Among the achievements in the last two decades and in most nations, Ms Lagarde mentioned low inflation, fiscal discipline, and financial stability.

 “These economies thrived because of their sound, rule-based policy frameworks, rising commodity prices, and favorable global financial conditions,” Lagarde said at a regional summit in Santiago.

Despite impressive achievements, “the road ahead looks increasingly bumpy” for the region's economies, she said.

Lagarde said Latin America's outlook will now be influenced by shifting economic and financial conditions worldwide. She said that while the U.S. appears on the path to recovery, prospects for the Euro zone countries are uncertain and the outlook for China has cooled.

Putting extra pressure on Latin American economies, commodity prices that lifted the region for more than a decade are now falling and the era of easy financing will soon end, said Lagarde.

She said that regional economic growth is expected to remain at 1.3% this year and 2.2% in 2015.

Latin America must now invest more in structural reforms in education and infrastructure to lift productivity and create economic diversification, the IMF chief said.

Lagarde said Latin America's middle class had grown by about 50% since 2003, partly because of a reduction in labor income inequality, including through rising minimum wages.

Improved healthcare and education have also helped reduce inequality in Argentina, Bolivia, Brazil, Mexico and Uruguay by 10 to 20% between 2000 and 2007, she said. But social indicators remain weaker, and inequality much higher, than in comparable regions, Lagarde added.

Why is this relevant right now? Because the rising expectations of Latin America's middle class are bumping up against shortcomings in the provision of public services,” she said, pointing as an example the protests sparked in Brazil last year by rising public transportation costs.

Categories: Economy, Politics, Latin America.

Top Comments

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  • ChrisR

    It's great being lectured to by a crook about financial probity.

    She just doesn’t get it that with the exception of Chile and hopefully soon, Uruguay, most governments in SA are run by crooks for their own reward, tacitly agreed by their citizens as long as they get a share. Basically they don’t understand WTF they, as grown-ups, should do.

    Most of them jumped on the Chin wagon just as the wheels fell off, but they detest ‘westerners’ with a vengeance. So what do they do now?

    Poor little children as they are.

    Dec 08th, 2014 - 10:43 am 0
  • golfcronie

    “they detest westerners ” is that just jealously or what?

    Dec 08th, 2014 - 11:08 am 0
  • Conqueror

    “Bumpy”, eh? Is that shorthand for 'huge potholes'? I wonder why Hugo Mendez decided to talk about 49% inflation, when others only mention 40% inflation? And the relationship with Kirchner is 'respectful'. Does that indicate the amount of the payoff? Is there anywhere in latam that is honest and tells the truth? So approach accordingly. Everywhere is assumed to lie. British and American investigators. Total access. We don't believe you, so there's nothing for you for the next 5 years. Just one question mark and it's another 5 years!

    Dec 08th, 2014 - 03:50 pm 0
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