Western Hemisphere
Regional Economic Outlook: Western Hemisphere
April 2008
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See also Executive Summary in Português
The main focus of this report is the outlook for the region in the face of the downturn now projected for the U.S. economy and the continuing risks that affect the global outlook. Overall the region is better placed than in the past to navigate the current financial turbulence, given reduced vulnerabilities and stronger policy frameworks. Nonetheless, the report points to risks that the global financial stress could curtail capital flows to the region and world commodity prices could fall more than expected. There are also risks arising from rising inflation and rapid private credit growth in a number of countries. The report then explores the policy options facing governments in the region, underscoring the need to preserve the gains of recent years.
Contents
| Executive Summary | |
| I. | Overview: Navigating Financial Turbulence |
| U.S. and Global Outlook: Financial Shocks Weakening Prospects | |
| Transmission of Global Shocks to the LAC Region | |
| LAC Outlook and Risks | |
| Options for Managing the Global Shock | |
| II. | Latin American Linkages to Global Financial Market Turbulence |
| Resilience So Far, but Global Context Weak | |
| Potential Pressure Points on the Region's Banks | |
| Tightening of Market Financing Conditions for Corporate Sector | |
| Conclusions | |
| III. | World Commodity Prices and LAC Inflation |
| Inflation Is Rising Across the LAC Region | |
| Analysis of Factors Driving Inflation | |
| Conclusions | |
| Main Economic Indicators | |
| References | |
| Boxes | |
| 1.1 | United States: State of Play in Financial Turmoil |
| 1.2 | Poverty and Inequality Trends in the LAC Region |
| 1.3 | The Global Surge in Commodity Prices: Implications for Latin America |
| 1.4 | Macroeconomic Overview of the Caribbean Region |
| 1.5 | Policies Concerning the Social Impact of Food Inflation |
| 1.6 | The Scope for a Countercyclical Fiscal Policy in Latin America |
| 2.1 | Financial Flows from the United States to Latin America |
| 2.2 | Financial Linkages in the Caribbean |
| 2.3 | Stock Market Linkages Between Latin America and the United States During 'Tail Events' |
| 3.1 | Inflation Pressures in the Caribbean |
| 3.2 | Effects of Commodity Prices on Consumer Prices |
| 3.3 | What Might Account for the Different Inflation Impact Across Countries? |