El 17 de noviembre de 2015, organizamos en la Fundación Ramón Areces con el Fondo Monetario Internacional la jornada 'Perspectivas y desafíos de política económica en América Latina'. En ella se presentó y analizó el Informe del FMI 'Perspectivas económicas-Las Américas (octubre, 2015)'.

1. Latin America and the
Caribbean:
Adjusting Under Pressure
Krishna Srinivasan
Western Hemisphere Department

2. Main takeaways
2
 Persistently low commodity prices. The size of the shock
differs across countries, but adjustment is needed
Financial conditions have tightened for LAC as a whole
Credibility of policies and frameworks is being tested
Adjustment depends on domestic fundamentals and
policy space

3. Latin America:
Weak Growth Prospects with
Inflationary Pressures
3

4. Steady actual and projected growth deterioration
LAC: Projections for End-of-Horizon Real GDP
Growth by WEO Vintage, 2000–15
(Percent)
4
4.5
3.4
4.2
2.9
2.6
3.1
3.6
4.1
4.6
5.1
2000Fall
2001Fall
2002Fall
2003Fall
2004Fall
2005Fall
2006Fall
2007Fall
2008Fall
2009Fall
2010Fall
2011Fall
2012Fall
2013Fall
2014Fall
WEOlive
WEO vintage
Source: IMF, World Economic Outlook database.
-9
-6
-3
0
3
6
9
12
15
18
5th percentile
Average¹
95th percentile
LAC: GDP Growth
(Percent)
Source: Haver Analytics.
¹ Purchasing power parity-weighted average for the 32 Latin
American countries.

5. But, with wide cross-country variation
5
Latin America and the Caribbean GDP Growth
(in percent)
Source: IMF, World Economic Outlook database.
¹ PPP-weighted average.
² Simple average.
2013 2014 2015 2016
Latin America and the Caribbean¹ 2.9 1.3 -0.3 0.8
Financially integrated economies LAC² 4.0 2.4 1.5 2.1
Brazil 2.7 0.1 -3.0 -1.0
Chile 4.3 1.9 2.3 2.5
Colombia 4.9 4.6 2.5 2.8
Mexico 1.4 2.1 2.3 2.8
Peru 5.8 2.4 2.4 3.3
Uruguay 5.1 3.5 2.5 2.2
Other commodity exporters2 6.0 2.0 -0.6 0.1
Argentina 2.9 0.5 0.4 -0.7
Bolivia 6.8 5.5 4.1 3.5
Ecuador 4.6 3.8 -0.6 0.1
Paraguay 14.2 4.4 3.0 3.8
Venezuela 1.3 -4.0 -10.0 -6.0
CAPDR2 4.2 4.4 4.0 4.1
Caribbean: Tourism-dependent2 1.5 2.4 2.3 2.3
Caribbean: commodity-dependent2 2.8 2.5 2.0 2.5

6. High inflation in some countries
6
Inflation ranking Country
Inflation
2015 (%)
1 Venezuela 190.0
5 Argentina 19.3
26 Brazil 9.3
28 Uruguay 9.0
64 Chile 4.2
65 Bolivia 4.2
66 Ecuador 4.0
68 Colombia 3.8
75 Peru 3.3
94 Mexico 2.6
Source: IMF, World Economic Outlook database; and IMF
staff calculations and projections.
Note: data available for 192 countries.
0
10
20
30
40
50
60
-2 -1 0 1 3 5 7 10 15 30 50 200
Numberofcountries
Inflation 2015 (percent)
Venezuela
(190%)
Argentina (19.3%)
Brazil (9.3%)
World Inflation Distribution, 2015
Source: IMF, World Economic Outlook database; and IMF staff
calculations and projections.
Note: data available for 192 countries.

7. Why Is Growth so Low?
Part I: Worsening External
Conditions
7

8. Weaker current and future commodity prices...
8
LAC: Terms of Trade¹
(Index: 2000=100)
Sources: IMF, World Economic Outlook database; and IMF staff
calculations and projections.
¹ GDP-PPP-weighted statistics; sample includes all 32 LAC countries
for which IMF staff estimates terms of trade.
Global Commodity Prices
(Index: 2000 =100)
Sources: IMF, World Economic Outlook database; and IMF staff
projections
80
130
180
230
280
330
380
430
Energy Metals Agricultural Raw Materials
Peak=2011
90
95
100
105
110
115
120
125
130
135
140

9. …have been reducing countries’ terms of trade…
9
Sources: IMF, World Economic Outlook database; and IMF staff calculations and projections.
Note: these numbers reflect net commodity exports.
Terms of Trade
(Index: 2000=100)
Metals Exporters Energy Goods Exporters Food/Diverse Exporters
80
100
120
140
160
180
200
Argentina Brazil
Uruguay
80
120
160
200
240
280
320
360
400
80
100
120
140
160
180
Colombia
Ecuador
Mexico
Bolivia (right scale)
Venezuela (right scale)
80
100
120
140
160
180
200
Chile Peru

10. … with different income shocks across countries …
10
Peak-to-Trough Change of Commodity Terms of Trade
(Percentage points of GDP)
0
5
10
15
20
25
0
2
4
6
8
10
12
NewZealand
Mexico
Brazil
Argentina
Canada
Peru
Australia
Colombia
Bolivia
Chile
Ecuador
Metals Energy
Food Advanced
Venezuela
(rightscale)
Sources: Gruss (2014), and IMF staff calculations.
LA6: Change in NEER vs. Change in Commodity
Terms of Trade Since April 2013³
Sources: IMF, Information Notice System database; Gruss (2014); and
IMF staff calculations.
Note: NEER = nominal effective exchange rate.
³ Data are through end-July 2015. Other countries include Hungary,
India, Indonesia, Israel, South Korea, Malaysia, Philippines, Poland,
Romania, South Africa, Thailand, and Turkey.
BRA
CHL
COL
MEX
PER
URY
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
-6 -3 0 3 6 9Changeinnominaleffectiveexchangerate
(percent)
LA6
Other countries
Change in commodity terms of trade (percent)

11. …affecting speed/size of current account adjustment…
11
Current Account
(Percent of GDP)
Sources: Haver Analytics, and IMF staff calculations.
Metals Exporters Energy Goods Exporters Food/Diverse Exporters
-10
-8
-6
-4
-2
0
2
4
Chile Peru
-10
-8
-6
-4
-2
0
2
4
Colombia Ecuador
Mexico Venezuela
-10
-8
-6
-4
-2
0
2
4
Argentina Brazil
Uruguay

12. But the region’s current account still needs to adjust
12
LAC Current Account and Real Effective Exchange Rate
Sources: IMF, World Economic Outlook database.
Note: the current account is calculated as the GDP PPP-weighted average of the 32 countries and the real effective exchange rate is the
GDP PPP-weighted average of Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico,
Nicaragua, Panama, Paraguay, Uruguay, and Venezuela.
60
70
80
90
100
110
120
130
140
150
160-6
-5
-4
-3
-2
-1
0
1
2
3
4
Current Account (percent of GDP)
Real effective exchange rate (Index: 2010=100, increase=depreciation, right scale)

13. Financial markets echo the economic woes
13
Latin America: Financial Markets
Source: Bloomberg, L.P.
Note: Yield on external bonds is based on J.P. Morgan Emerging Markets Bond Index for Latin America. Equity index is
MSCI Emerging Markets Latin America Index equity local net total return index. Currency index is Bloomberg J.P. Morgan
Latin America Currency Index. The equity and currency indices are rebased to January 2, 2013=100.
60
70
80
90
100
110
120
5.5
6.0
6.5
7.0
7.5
8.0
Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15
Yield on external bonds (percent)
Equity (right scale)
Currency (right scale)

14. Financial indicators are still strong, but will likely
deteriorate with slowdown…..
14
-5
0
5
10
15
20
25
CHL
PER
MEX
BRA
COL
Asia
EMEA2011Q1 Difference 2015Q1
-2
-1
0
1
2
3
4
5
6
7
8
CHL
BRA
MEX
COL
PER
Asia
EMEA
2011Q1 Difference 2015Q1
Capital Adequacy Ratio
(Percent)
Nonperforming Loans
(Percent of total loans)
Return on Assets
(Percent)
Sources: IMF, Financial Soundness Indicators; and IMF staff calculations.
Note: Asia = India, Indonesia, Korea, Malaysia, and Philippines. EMEA = Hungary, Israel, Poland, Russia, South Africa, and Turkey.
-2
-1
0
1
2
3
4
5
6
BRA
CHL
MEX
PER
COL
Asia
EMEA
2011Q1 Difference 2015Q1

15. 15
…corporate leverage poses a risk
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
38
40
42
44
46
48
50
52
54
56
2010q1
2010q2
2010q3
2010q4
2011q1
2011q2
2011q3
2011q4
2012q1
2012q2
2012q3
2012q4
2013q1
2013q2
2013q3
2013q4
2014q1
2014q2
2014q3
2014q4
2015q1
2015q2
Debt to Equity (Percent)
EBITDA to Interest Expense (ratio, right scale)
LA5: Nonfinancial Companies (Leverage and
Interest Rate Coverage)
(Median values)
Sources: Bloomberg; and IMF staff calculations.
Note: Sample includes approximately 450 nonfinancial firms in
Brazil, Chile, Colombia, Mexico and Peru.
30
35
40
45
50
55
60
65
70
2014Q3
2015Q2
2014Q3
2015Q2
2014Q3
2015Q2
2014Q3
2015Q2
Brazil Chile Mexico Peru
Debt to Equity
(percent)
0
1
2
3
4
5
6
7
8
9
2014Q3
2015Q2
2014Q3
2015Q2
2014Q3
2015Q2
2014Q3
2015Q2
Brazil Chile Mexico Peru
EBITDA to Interest
Expense (ratio)
Sources: Bloomberg; and IMF staff calculations.
Note: Sample includes approximately 200 nonfinancial firms in
Brazil, 100 in Chile, 70 in Mexico and 60 in Peru.
Nonfinancial Companies in Selected Countries
(Leverage and Interest Rate Coverage)
(Median values)

16. Why Is Growth so Low?
Part II: Domestic Conditions Matter
16

17. Private demand and confidence have deteriorated
17
LA5: Private Consumption and Gross Fixed Capital
Formation
(Year-over-year percent change)
Sources: Haver Analytics; IMF, World Economic Outlook database;
and IMF staff calculations.
Note: LA5 includes Brazil, Chile, Colombia, Mexico, and Peru.
-12
-7
-2
3
8
13
18 Private Consumption
Gross Fixed Capital Formation
Latin America: Confidence in the economy has trended down
(Index: 2011=100)
70
75
80
85
90
95
100
105
110
115
120
LA4 Consumer Confidence Index¹
LA5 Business Confidence Index²
Sources: Haver Analytics; and IMF staff calculations.
¹ Purchasing power parity GDP-weighted average of Brazil, Chile,
Colombia, and Mexico.
² Purchasing power parity GDP-weighted average of Brazil, Chile,
Colombia, Mexico, and Peru.

18. Fiscal space has shrunk significantly in most countries
18
LA6: Primary Balance
(Percent of GDP)
-4
-3
-2
-1
0
1
2
3
4
5
Brazil Chile Colombia Mexico Peru Uruguay
2008 2015
Sources: IMF, World Economic Outlook database; and IMF staff
calculations and projections.
0
10
20
30
40
50
60
70
80
Brazil Chile Colombia Mexico Peru Uruguay
2008 2015
LA6: Government Gross Debt
(Percent of GDP)
Sources: IMF, World Economic Outlook database; and IMF staff
calculations and projections.

19. Monetary stance broadly appropriate
19
Monetary Policy Rates and Future Inflation
(Percent)
Sources: Bloomberg, L.P.; IMF, World Economic Outlook database;
and IMF staff calculations.
¹ National Currency per US Dollar. Percentage change of the average
of June, 2014 to September, 2015.
0
20
40
60
80
100
0
2
4
6
8
10
12
14
16
Brazil Chile Colombia Mexico Peru Uruguay
Inflation target range
2017 inflation market expectations
Latest monetary policy rate
Depreciation of exchange rate (right scale)¹

20. Policy space is limited
20
10 -5 -10
Case for stimulus Unclear case No case for stimulus
Brazil Mexico Colombia Chile Peru Uruguay
Cyclical Position
Output gap 2015 (percent of GDP) -3.3 -0.8 0.0 -0.7 -2.5 2.0
Output gap 2016 (percent of GDP) -4.6 -0.6 -0.4 -1.1 -3.1 0.8
Unemployment rate deviation (current minus previous 5-year average, percentage points) 1.8 -0.5 -1.5 -0.1 -0.1 0.2
Policy Space
General government gross debt 2015 (percent of GDP) 69.9 52.0 50.9 18.1 22.4 64.1
General government gross debt projected increase (2018-15, percent of GDP) 6.6 -0.5 -5.1 4.1 2.1 3.4
Primary balance deviation (2015 minus 2001-2008 average, percent of GDP) -3.6 -2.0 -1.4 -5.5 -2.8 -2.2
Current account deviation (2015 minus previous 10-year average, percent of GDP) -2.7 -1.1 -3.7 -1.0 -2.5 -1.3
Inflation forecast gap 2015 (percentage points) 4.8 -0.2 1.4 1.5 1.7 3.3
Inflation forecast gap 2016 (percentage points) 1.3 0.4 0.4 0.3 1.2 2.6
Sources: Consensus Forecast; Haver Analytics; IMF, World Economic Outlook; and IMF staff estimate (WEO live staff estimates.)
Output gap: green=well below potential (<-1.0); yellow=close to potential (between -1.0 and 0); red=above potential (>0) ;
Unemployment rate deviation (seasonally adjusted July datapoint minus 5-year average); green=above 0; yellow=between -1 and 0)red=below -1.
General government gross debt: green=low debt (<35); yellow=medium debt (between 35 and 60); red=high debt (>60) .
General government gross debt projected increase (2018 projection minus 2015 projection); green=below 0; yellow=0 and 5r red=above 5.
Current account deviation (deviation from 10-year average): green=above average ; yellow=around average (between -1.5 and 0); red=below average (<-1.5) .
staff estimates.
Inflation forecast gap (Consensus forecast inflation, end-2015 or 2016, minus midpoint target): green=below target (<0); yellow=around target (between 0 and 1);
red=above target (>1).

21. Stronger market concerns about 4 countries
21
PER
MEX
CHL
COL
ARG
BRA
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
1400
-14 -12 -10 -8 -6 -4 -2 0
EMBIG(September2015)
Change in commodity terms of trade (percent of GDP)
VEN (-21
change in
CTOT as % of
GDP ; 2974
EMBIG)
ECU
Change in Commodity Terms of Trade and EMBIG
Sources: Bloomberg L.P., Gruss (2014), and IMF staff calculations.
EMBIG
(Spread, basis points)
Source: Bloomberg L.P.
0
500
1000
1500
2000
2500
3000
CHL PER MEX COL BRA ARG ECU VEN
EMBIG May 2014
EMBIG September 23, 2015

22. Country cases
22

23. Brazil: Recession with anchored inflation expectations
23
Brazil: Growth and Job Creation
(Quarterly % change, a.r., and thousands)
Brazil: Inflation and Market Expectations
(Year-on-year % change and expectations per
survey vintage)
Source: Central Bank of Brazil. Source: Central Bank of Brazil.
2
3
4
5
6
7
8
9
10
Y-o-y inflation End-2016
End-2017 End-2018
Target
mid-point
Tolerance
band
Expectations appear to
be re-anchored over the
Medium-
-650
-350
-50
250
550
-45
-35
-25
-15
-5
5
15
25
35
45
Real GDP
Private Consumption
Total investment
Net Job Creation (RHS)

24. Brazil: Fiscal woes are undermining market
sentiment
24
Brazil: Primary Balance
(In percent of GDP)
Source: National Authorities. Source: Bloomberg and Haver Analytics.
-2
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3
Budget Law
Binding Targets
Revised target
Brazil: 5Y CDS and Gross Public Debt
(In basis points and % of GDP)
60
65
70
75
80
0
50
100
150
200
250
300
350
400
450
CDS
Gross Debt-to-GDP (RHS)

25. Ecuador: low competitiveness + large external shock
 sharp deceleration in economic activity
25
REER and Terms of Trade
(Index: March 2007=100)
Sources: Gruss (2014); Haver Analytics; IMF, WEO;
and INS.
GDP Growth and Current Account
(Percent)
Source: Haver Analytics; and IMF staff calculations
and projections.
Sources: Haver Analytics; IMF, World Economic
Outlook database; and IMF staff calculations
Minimum wage
(U.S. Dollars)
0
50
100
150
200
250
300
350
400
450
Brazil Chile
Colombia Mexico
Peru Ecuador
85
90
95
100
105
110
115
120
125
Real Effective Exchange Rate
Commodity Terms of Trade
-7
-5
-3
-1
1
3
5
7
9
11
GDP Growth (Percent)
Current Account (Percent of GDP)

26. Argentina: Increased monetization of fiscal deficits,
dwindling reserves
26
Central Bank Assistance to the
Treasury
(Percent of GDP)
Federal Balance
(Percent of GDP)
Sources: Ministerio de Economía y Finanzas Públicas; Banco Central de la República Argentina; and IMF staff calculations and projections.
0
10
20
30
40
50
0
1
2
3
4
5
6
7
2009 2011 2013 2015
proj.
FX loans (use of reserves)
Advances
Transfer of profits
Monetary base growth (y/y % change; RHS)
-7
-6
-5
-4
-3
-2
-1
0
2009 2011 2013 2015
proj.
Overall balance net of
transfers from central bank
and social security
Overall balance
International Reserves
(Billions of U.S. dollars)
10
15
20
25
30
35
40
45
50
55
Jun-11
Nov-11
Apr-12
Sep-12
Feb-13
Jul-13
Dec-13
May-14
Oct-14
Mar-15
Aug-15
Gross reserves
Gross reserves net of China swap,
repos and trade credits

27. Venezuela: falling oil prices compressed imports and fiscal
revenue, widening the monetization of fiscal deficits
27
Fiscal balance and monetary financing
(Percent of GDP)
Source: National authorities, and IMF staff
calculations and projections.
0
1
2
3
4
5
6
7
8
9
0
5
10
15
20
25
30
2010 2011 2012 2013 2014 2015 2016
CPS deficit
Monetary Financing
Oil revenue (PDVSA surplus, right scale)
Exports and Imports
(US$ billion)
Source: National authorities, and IMF staff
calculations and projections
¹ Venezuela basket.
0
20
40
60
80
100
120
0
10
20
30
40
50
60
70
80
90
2010 2011 2012 2013 2014 2015 2016
Net-oil exports
Non-oil imports
Oil price (US$ per barrel, right scale)¹
0
25
50
75
100
125
150
175
200
225
250
-12
-10
-8
-6
-4
-2
0
2
4
6
8
Real GDP Growth
Inflation (right scale)
GDP Growth and Inflation
(Percent)
Source: IMF, World Economic Outlook database,
and IMF staff calculations and projections.

28. Risks ahead
28
 China’s slowdown more than projected: lower
commodity prices, reduced world demand
U.S. liftoff: long-term rates bound to rise
Corporate leverage has gone up
Latin America is particularly exposed to these risks

29. A further slowdown in China would affect growth in
the region, especially in its commodity exporters…
29
Response of GDP in LAC to a 1% negative shock to China’s GDP
(Percent deviation from trend)
Source: Gruss (2014).
Note: Simple average for selected LAC commodity exporters
(Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Honduras,
Paraguay, Peru , Trinidad & Tobago, Uruguay, Venezuela).
-0.6
-0.5
-0.4
-0.3
-0.2
-0.1
0.0
1 2 3 4 5 6
Years
Average of LAC
commodity exporters
-0.9
-0.8
-0.7
-0.6
-0.5
-0.4
-0.3
-0.2
-0.1
0.0
PER
ARG
COL
CHL
ECU
VEN
URY
BOL
BRA
Average
Deviation of GDP from trend,
3 years after the shock
Source: Gruss (2014).

30. …not only due to lower demand, but also because of
its potential effect on commodity prices
30
Response to one-standard deviation (negative) surprise in monthly Chinese activity data
(Percent)
See: “Mind the Dragon: Latin America’s Exposure to China”, IMF Direct blog.
Sources: Bloomberg; and IMF staff calculations.
1 Denotes the coefficient from individual regressions in which the dependent variable is the percent change of each currency (three-month commodity
future) over the five (three) days following each data release. An increase in the exchange rate denotes an appreciation. The only explanatory variable is a
surprise in China's industrial value added growth (the difference between the actual year-on-year change and Bloomberg's median forecast at the time of
the data release), scaled by the standard deviation of historical surprises. Red bars denote that the coefficient is significant at the 95% confidence level. The
data span from March 2005 to September 2014.
-0.70
-0.60
-0.50
-0.40
-0.30
-0.20
-0.10
0.00
HongKongSAR
China
Thailand
Peru
TaiwanProv.ofChina
Philippines
Indonesia
Singapore
Malaysia
JPMADXY
Uruguay
Israel
India
Russia
Morocco
Australia
Slovakia
Hungary
Mexico
Colombia
JPMLACI
S.Korea
Norway
S.Africa
Turkey
Sweden
Chile
Brazil
Poland
Exchange rates
-1.4
-1.2
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
Aluminium
Iron
Tin
Lead
Oil(Brent)
Nickel
Copper
Commodity futures

31. Fed’s liftoff: impact depends on risks around
normalization path
31
Impact of alternative scenarios on long-term interest rates in selected economies
(Basis points)
Risk scenario
Source: IMF staff calculations.
Note: This chart shows the change in long-term government bonds due to the realization of each scenario. The counterfactual is a
situation in which U.S. monetary policy is left unchanged, and this is broadly understood in the markets as consistent with Federal
Reserve policy and the realized evolution of the U.S. economy. The baseline assumes interest rates evolve as currently priced by futures.
The risk scenario assumes a further (unexpected) monetary tightening of 50 basis points and, in addition, an increase in the term
premium of about 109 basis points (up to its pre-crisis average).
0
50
100
150
200
250
USA BRA COL PER CHL MEX AUS CAN CZE SWE ZAF KOR MYS
0
50
100
150
200
250
USA BRA PER MEX AUS CZE ZAF MYS
Surprise tightening and decompression
of term premium
Smooth lift-off
0
50
100
150
200
250
USA BRA PER MEX AUS CZE ZAF MYS
Surprise tightening and decompression
of term premium
Smooth lift-off

32. V. Policy implications
32

33. Policy implications
33
New external context exchange rate flexibility is key
Policy space matters, but not easily available
Chile and Peru  smooth adjustment is possible
Colombia and Mexico  fiscal adjustment is needed
Monetary stance can be supportive, with an eye on
medium-term inflation expectations
Argentina, Brazil, Ecuador, and Venezuela: adjustment is
an imperative, not a choice
Structural reforms needed to alleviate supply
constraints. Fiscal consolidation should shield public
investment.