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Latin America's Economic Forecasts May Be Too Rosy (Photo: IMF)
by Andres Oppenheimer
What's most interesting about the
Are the good times coming back to the region? Or are the world's largest financial institutions once again being too optimistic?
According to the IMF's semi-annual report released at its spring meeting in Washington on
Among the region's largest economies, the best-performing one will be Mexico, which is scheduled to grow by 3 percent this year, and by 3.5 percent next year, the IMF said. "Mexico's ongoing economic reforms, especially in the energy and telecommunications sectors, herald higher potential growth for the medium term," the IMF said in its report.
Other countries that will show healthy growth rates will be Peru, (projected to grow by 5.5 percent this year and 5.8 percent next year,) Bolivia (5.1 percent this year and 5 percent next year,) Paraguay (4.8 percent this year and 4.5 percent next year), Colombia (4.5 percent both years) and Chile (3.6 percent this year and 4.1 percent next year,) the IMF said.
Among the countries that will show meager growth are Brazil, the region's largest country, which is projected to grow by 1.8 percent this year and 2.7 percent next year, according to the IMF. Brazil's economy will continue to suffer from a "loss of competitiveness and low business confidence," the IMF said.
Finally, Latin America's worst performing economies will be Venezuela and Argentina, the IMF says. Venezuela's economy will shrink by 0.5 percent this year, and will drop by another 1 percent next year.
In an interview, IMF Western Hemisphere director Alejandro Werner told me that he projects Venezuela's inflation rate, which reached a world record of 56 percent last year, to rise to 75 percent in 2014.
Werner said that unless Venezuela adopts an economic adjustment program, inflation may turn into hyper-inflation in coming years. "Typically, when countries reach inflation rates of 50 or 55 percent, they either adopt adjustment programs to put a break on it, or inflation keeps growing progressively," he said.
Argentina's economy is projected to remain virtually flat, with a 0.5 percent growth this year, and will probably grow by 1 percent next year.
Overall, both the IMF and the
My opinion: I'm a bit skeptical about the
At this time last year, both the IMF and the
Unless Brazil - the region's largest economy - takes serious measures to encourage investments and become more competitive in the world economy, and Venezuela and Argentina make a serious U-turn from their disastrous spending sprees of the past decade, my guess is the region will barely grow over the next two years.
I hope I'm wrong about this, but based on last year's forecasts, I recommend to take the IMF,
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Article: Distributed via Foreign Policy in Focus
"Latin America's Economic Forecasts May Be Too Rosy"