Title: LATIN AMERICA UNDER THE CURRENT TURMOIL
1LATIN AMERICA UNDER THE CURRENT TURMOIL
JOSÉ ANTONIO OCAMPOCOLUMBIA UNIVERSITY
2BASIC DETERMINANTS OF THE RECENT BOOM
- High levels of remittances
- High commodity prices (a mixed blessing for some)
- Exceptional conditions of external financing
- ALL OF THESE CONDITIONS HAVE EXPERIENCED A
SHARP RECENT DETERIORATION
3HIGH LEVELS OF REMITTANCES(Remittances as of
GDP)
4HIGH NON-OIL COMMODITY PRICESMORE MINERALS THAN
AGRICULTURE
5 BUT THE BENEFITS WERE UNEVENLY DISTRIBUTED
6BUT THE COMMODITY BOOM IS OVER
7EXTERNAL FINANCIAL CONDITIONS FROM EXCEPTIONAL
FINANCING TO FLIGHT TO SAFETY
8FROM BOOMING FLOWS TO SCARCITY
9END OF THE STOCK MARKET BOOM
10MAIN RISKS
- Food inflation made monetary management
difficult. The effects of monetary policies are
still being felt. - The deterioration of commodity prices may lead to
a sharp deterioration in the current account - There are inherited policy vulnerabilities,
though not as strong as during previous crises - Strong short-term effects on growth, in the
context of weak long-term growth
11INFLATION ACCELERATION HAS NOT BEEN FULLY REVERSED
12THE REVERSAL OF THE COMMODITY BOOM WILL LEAD TO A
DETERIORATION IN THE CURRENT ACCOUNT
13 WITH DIFFERENTIAL EFFECTSACROSS THE REGION
14THE IMPACT OF THE POLICY ENVIRONMENT OF RECENT
YEARS
- Public sector balances are generally healthy
- but public sector spending has increased
rapidly in most countries - Monetary an credit policy has not neutralized the
boom - The best legacy foreign exchange reserves as the
result of massive interventions in foreign
exchange markets.
15PUBLIC SECTOR BALANCES LOOK HEALTHY
16 BUT PUBLIC SECTOR SPENDING HAS INCREASED
RAPIDLY IN MOST COUNTRIES
17MONETARY AND CREDIT POLICY HAS NOT NEUTRALIZED
THE BOOM
18MASSIVE INTERVENTIONS IN FOREIGN EXCHANGE MARKETS
19 SHARP REDUCTION IN EXTERNAL DEBT RATIOS
20BUT MIXED EFFECTS ON EXCHANGE RATES
21A TYPOLOGY OF VULNERABILITIES
22GROWTH PERSPECTIVESSTRONG GROWTH RECESION IN
THE INDUSTRIAL ECONOMIES
23 THAT IS TRANSMITED TO LATIN AMERICA
24IN THE CONTEXT OF SLOW GROWTH IN A LONGER TERM
PERSPECTIVE
25LATIN AMERICA UNDER THE CURRENT TURMOIL
JOSÉ ANTONIO OCAMPOCOLUMBIA UNIVERSITY