By Narayan Ammachchi
The gulf between haves and have-nots is widening at a rapid pace in Mexico and Chile, shows a recent OECD (Organization for Economic Cooperation and Development) survey conducted in 33 countries across the world.
The international organization has blamed the 2008 global economic crisis for the widening gulf, because inequality worsened more between 2007 and 2010 than in the previous 12 years.
Inequality was already widespread in several countries by the time they slipped into recession. “In some of the countries where the crisis hit harder, poorer households either lost more income from the recession or benefited less from recovery,” the report pointed out.
In the countries surveyed, the richest 10 percent earned 9.5 times the income of the poorest 10 percent in 2010.
The other countries where the economic disparity widened further include Turkey, the United States and Israel.
“Nordic and …
By Narayan Ammachchi
Alejandro Werner, IMF’s new Director of the Western Hemisphere, says he expects the economic growth in Latin America to remain strong in 2013, but he has asked the governments in the region to focus on ‘growth-enhancing and employment-generating’ policies to reduce poverty and income inequality.
Werner, who left BBVA Bancomer to join the IMF in January this year, says large capital inflows were generating some volatility in some domestic financial markets.
“The IMF has to work closely with policymakers in these countries to help them design policies that will put them on a path of higher growth and declining debt-to-GDP levels,” Werner stated in an interview given to IMF’s in-house publication IMF Survey Online.
The IMF’s executive said he would work with Brazil and Mexican governments to help them strengthen their fiscal and regulatory frameworks. “I think we have to assist …
By Michael Shifter
Twenty years ago it would have been hard to imagine that all Latin American and Caribbean governments would have created an organization that excluded the United States. It would have been equally unthinkable that the head of the International Monetary Fund would have gone to the region to request help for a European economic crisis.
But as both these events took place last week, it was clear how much has changed over the past two decades. Much of Latin America is increasingly confident and assertive on the global stage. The region is politically independent of the United States. In most countries, macroeconomic management has been exemplary and fiscal discipline has been the norm.
The formal launching of CELAC (Community of Latin American and Caribbean States) revealed the strength of regionalism in Latin America. It was symbolically important, and …
By Brendan Wolters
From Chile to Haiti, we recap how the region’s economies are trending
What Latin American countries made a good showing on the World Economic Forum (WEFs) Global Competitiveness Index (GCI), and which ones have a lot of work to do? Defining competitiveness as “the set of institutions, policies, and factors that determine the level of productivity of a country,” annually the WEF measures the microeconomic and macroeconomic foundations of national competitiveness.
IMF warned inflation is threatening South America but also admitted countries had a dilemma since increasing interest rates could further worsen the appreciation of local currencies vis-à-vis the US dollar.
“Inflation is growing” said IMF Director for the Western Hemisphere Department Nicolas Eyzaguirre and this is not only limited to “food and fuel prices”. Regional economies are clearly over-heated, he added and “this is a problem”.
Eyzaguirre mentioned internal and external elements as responsible for the situation. Domestically elevated government spending is justified when facing a financial and economic crisis, “but not at boom times”, such is the case.
“It’s time to change” he insisted pointing out that governments in the region last year continued with stimuli policies as if the crisis was still present and actually “it was the opposite”.
Eyzaguirre mentioned as an example to follow Brazil’s recent …
Colombian President Juan Manuel Santos recently submitted his country’s application to join the Organization for Economic Cooperation and Development (OECD). In an e-mail interview, Michael Shifter, president of the Inter-American Dialogue, discussed the prospect of Colombia’s OECD membership.
WPR: What are the benefits and responsibilities of OECD membership?
Michael Shifter: The OECD is a privileged club: In Latin America, only Chile and Mexico are currently members. Membership is a measure of a certain level of economic development and a commitment to sound policies and good-governance practices. OECD members are expected to make important policy decisions in accordance with the highest standards and to coordinate economic approaches among themselves. Membership is symbolically significant and conveys a strong message to the world that serious institutional-reform efforts are underway.
WPR: What is the likelihood that Colombia will gain membership?
Shifter: Though it is hard to know with any certainty, …
BY PAMELA COX, Vice President for the Latin America and the Caribbean Region
A year ago, things looked pretty gloomy in Latin America. World demand had taken a nose-dive, and exports from Latin America and the Caribbean had dropped more than a third in just six months. More concretely, commodity prices had collapsed. A barrel of oil had gone from $147 per barrel in July 2008 to $42 in February 2009. Prices of soybeans, wheat and copper also dropped dramatically. For a region, where 90 percent of the population resides in net commodity exporter nations, the plunging prices were destined to take a toll.
In human terms, we calculate that the recession added about 10 million to the ranks of the poor and 2.5 million to the ranks of the unemployed in Latin America.
To make matters worse, remittances, while still resilient, have shown some decline. These flows …