IMF: Latin America shows “resilience” in its economy, violence remains a challenge

The economy of Latin America and the Caribbean appears “resilient” despite the challenges left by the pandemic, while violence and growing crime in some countries remain one of the main challenges for the growth of the region according to estimated the International Monetary Fund (IMF) during its regional review this Friday.

“Labor markets have remained resilient with unemployment still at historically low levels in almost the entire region,” said Rodrigo Valdés, director of the IMF's Western Hemisphere Department, during his spring meetings with the World Bank in Washington. .

The IMF projected that the region's economy will grow by 2% in 2024, however, they see the growing violence and crime in the region as a risk to this growth.

Valdés pointed out that to counteract the impact it is important to “improve the business environment and increase historical investment, comprehensive and better sequence strategies on climate change will also boost the economy.”

The organization also estimated that inflation is decreasing and is projected to continue falling in 2024.

Valdés referred to the “urgency” of accelerating growth in the region, which with an average of 2% in the medium term is not a sufficient pace to allow or extend prosperity.

Among the IMF's messages for the region, Valdés also emphasized the need to bring public debt to more balanced levels through fiscal adjustment and the urgency of boosting the economy to raise the potential for expansion.

Diplomatic crisis between Ecuador and Mexico

Valdés assured that the IMF is “closely following” the events that followed the invasion of the Mexican embassy in Ecuador on April 5, and that led to the breakdown of diplomatic relations between both countries.

“We hope that this matter will be resolved through diplomacy and in line with international regulations,” said Valdés, assuring that an IMF team recently visited the country and had “conversations” with authorities about “this and other issues.”

The IMF announced in March that Ecuadorian authorities officially requested to start talks on a potential new program to help the country's economic situation.

Ecuador has been battling violence attributed to drug trafficking, and the government proposed in February to increase security spending by $214 million this year while deploying the military to help combat the violence.

In the case of other countries like Haiti, which are facing a security crisis, Valdés assured that they have had conversations about the economic progress of the Caribbean nation, the priority is to “restore security.”

This aspect is “a precondition for the lack of stability and for growth to materialize,” said Valdés.

On the other hand, Valdés added that conversations continue with El Salvador about the creation of a program supported by the IMF.

Bitcoin, he said, is also “part of the discussion” about how to take measures to address the risk “posed by the legal status” of the cryptocurrency.

[Con información de Reuters]

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