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LatAm Economic Growth is Stagnating, Countries Should Change Policy: IMF

Economic activities in Latin America and the Caribbean were stagnated in 2019, says the International Monitory Fund, urging the governments in the region to restructure their economic policies to ignite growth.

In an opinion piece on the Fund’s website, Alejandro Werner, IMF’s Director for the Western Hemisphere, says substandard infrastructure, weak educational system, and the decreasing demand for the commodity in the global marketplace, are threatening to dampen the hopes of faster economic growth in the region.

With the future for commodity looking bleak, the regional countries should restructure their economic policies and focus on strengthening their educational system and infrastructure.

Between 2014 and 2019, the real GDP per capita in the region declined by 0.6%, according to the IMF.

Many factors were contributing to the slowdown, including weak business climate and uncertain policy decisions in large countries such as Brazil and Mexico.

“Continued economic rebalancing in stressed economies that experienced sudden stops in capital flows in 2018-19 (Argentina, Ecuador) while helping restore internal and external balances, have also acted as a drag on economic growth,” Werner wrote.

Considering the recent World Economic Outlook update, the LatAm economies may grow an average of 1.6% in 2020 and 2.3% in 2021.

“Economic policies will need to strike a balance between rebuilding policy space and maintaining economic stability on the one hand and supporting economic activity and strengthening the social safety net on the other hand,”  Werner said pointing to the social unrest in a few regional countries, including Bolivia, Colombia, Chile, and Ecuador.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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