ISTANBUL, Oct 1 – Latin America\’s economies, battered by the global crisis, are in the midst of a rebound at varying speeds, helped by improving global conditions and commodity prices, the IMF said on Thursday.
The International Monetary Fund said that the economies of Latin America and the Caribbean would expand in 2010 at an average pace of 2.9 percent.
The forecast in the semiannual World Economic Outlook was better than the 1.6 percent growth projection six months earlier.
Yet the IMF said the 2009 decline would be deeper than initially expected at 2.5 percent, compared with the April forecast for a 1.6 percent decline.
"There are indications that recovery got under way during the second quarter of 2009, and it should gather moderate speed in the second half of the year, led by Brazil," the IMF said.
"The pace of recovery, however, is not uniform across economies. Brazil will lead the way, in part because of its large domestic market and its diversified export products and markets, especially its increasing links to Asia."
The IMF projects Brazil\’s gross domestic product (GDP) will expand 3.5 percent in 2010 after a 0.7 percent contraction in 2009.
Other countries such as Mexico took a bigger hit from the crisis, the IMF noted.
Mexico is expected to show 2010 expansion of 3.3 percent after a stunning decline of 7.3 percent for 2009, based on IMF projections.
"Mexico — the hardest-hit economy in the Western Hemisphere — will recover more slowly because its economy has suffered a sharper drop in trade flows, because of its high trade integration, dependence on the United States, and reliance on manufacturing exports," the report said.
The fastest pace of growth in the region will be Peru\’s 5.8 percent expansion in 2010, the IMF predicted.
Others will grow at varying paces except for oil-dependent Venezuela, which is expected to contract 0.4 percent in 2010 after a 0.2 percent decline in 2009.
The IMF said the countries in the region that depend on oil and other commodities need to do more to cope with the ups and downs of those markets.
"In order to increase resilience to future external shocks, oil and commodity exporters should consider developing or enhancing frameworks for countercyclical policies tied to oil and commodity prices, learning from the successful experience of Chile," the IMF said.
Chile\’s projected GDP growth in 2010 was 4.0 percent after its estimated 1.7 percent contraction in 2009. Argentina meanwhile is expected to grow 1.5 percent after a 2.5 percent decline.
Overall, the IMF said the region is starting to show some revival as the global economy steadies.
"Capital flows have restarted to the region, and sovereign spreads have narrowed," it said.
"Industrial production has picked up in many economies, notably Brazil, and the contraction in Mexico is moderating. The recent rebound of commodity prices is also improving the overall outlook for the region, given the prominence of commodity exports. Consumer and business confidence have improved, and retail sales have firmed up."