The pandemic appears to be receding in many parts of Latin America and the Caribbean.
The pandemic appears to be receding in many parts of Latin America and the Caribbean.

Economic Recovery Underway in Latin America, the Caribbean: IMF

English covid-19 pandemic latin america finance
Wahyu Dwi Anggoro • 22 October 2021 12:52
Washington: An economic recovery is underway in Latin America and the Caribbean (LAC) but the COVID-19 pandemic still casts shadows on much of the region, according to the IMF's latest Regional Economic Outlook for Latin America and the Caribbean.
 
Acccording to the report, the recovery was robust in the first quarter of 2021 but lost momentum in some countries in the second quarter, reflecting the rebound in COVID-19 cases
 
"We expect LAC to grow by 6.3 percent in 2021 and then slow to around 3 percent in 2022. However, there is a heterogeneity across the region and a lot of uncertainty associated with the outlook," said IMF's Acting Director of the Western Hemisphere Department Nigel Chalk in the report.

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"The good news is that, after taking a very heavy toll for much of 2021, the pandemic appears to be receding in many parts of Latin America and the Caribbean. However, this is not time for complacency. The battle against the virus is not over and countries continue to face a race between vaccinations and the spread of new variants. It is clear that rapid vaccination campaigns have worked to mitigate the pandemic’s impact. But we must also recognize that the continued unequal availability of vaccines remains a major challenge, especially for the region’s poorer and less populous countries," he explained.
 
According to him, broadly favorable external conditions, high commodity prices, and pent-up demand support short-term growth, while monetary and fiscal policy reversals work in the other direction. 
 
Meanwhile, main downside risks are the emergence of more transmissible and deadlier COVID-19 variants, tightening of global financial conditions, sovereign debt rollover risks, and social unrest as a year with heavy election schedule looms.
 
Fiscal policy, he said, should allocate sufficient resources for health spending, including vaccination, and continue to support households and firms in a more targeted fashion while the pandemic persists, backed by credible assurances of medium-term debt sustainability to maintain access to finance.
 
Monetary policy, he added, has started to address inflationary pressures but should continue to support economic activity insofar as the dynamics of inflation expectations permit.
 
"Inflation pressures are becoming an important feature for much of the region.  Rising commodity and food prices, supply chain disruptions, global increases in goods prices, sector-specific constraints, and closing output gaps are all driving consumer prices higher. Many central banks in the region have rightly reacted to these pressures by raising policy rates and underscoring their commitment to their inflation goals. It is likely that these interest rate increases will continue in many countries in the coming months and, if there are signs that inflation expectations are becoming less well anchored, then central banks will have to react promptly," he said 
 
(WAH)
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