IMF warns about the three risks that Latin American countries will face

The International Monetary Fund (IMF) spoke about the three risks that Latin American countries will face.

In the first place is the suffering of new outbreaks of the coronavirus that slow down the recovery of the economies.

Although there is progress in the vaccination process, there is no certainty that 100% of the populations will be reached, so “we do not know if there will be a new wave of the coronavirus,” stressed Ilan Goldfajn, new director of the Department of the Hemisphere. Occidental of the IMF, during an online conference on the economic outlook for Latin America for this 2022.

The second risk is related to the harsher conditions that countries will have to access financing, in the midst of a situation where central banks globally are raising their reference interest rates to combat inflation.

“There is a risk of less funding or conditions will be tougher. Added to this is the legacy of the spending that countries have made due to the pandemic; some countries don’t have as much fiscal space,” added Ilan Goldfajn.

The expert pointed out that the third risk will be marked by the impact that global conflicts may have on the region, since they have an impact on all markets.

Geopolitical conflicts, such as Russia and Ukraine, can affect markets such as oil prices, minerals, among others, which in turn impacts Latin American countries.

On the other hand, Goldfajn highlighted the strong recovery of the Latin American economies with an average GDP growth of 6.8% in 2021, although a slowdown is expected for this year as the estimated growth is 2.4%.

“The new conditions of the central banks make the recovery slower this year. The 2.4% estimate is closer to the region’s potential growth,” he noted.

During the conference, he also pointed out other pending challenges for the countries of the region, such as the reduction of social inequalities and the fight against informality.

Regarding the second, he stressed that the costs of hiring and firing should be “reduced, because that helps to formalize,” Goldfajn pointed out.