Download Diapositiva 1

LATIN AMERICA AND THE
FINANCIAL CRISIS
Mario I. Blejer
1
MIB
Latin America: GDP Growth
7
6
5
percent
4
3
2
1
0
-1
-2
-3
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: ECLA
2
[email protected]
Amlat: Crecimiento del PIB (%)
Fuente: Institute of International Finance
3
Latin America: Larger Fall but
Stronger Recovery
Source: Institute of International Finance
4
Long Term GDP Growth Prospects
(% - 10 year rolling average)
5
Are there some areas in which
particular lessons could be learned?
• Pragmatism about Exchange Rate Policies
• Capital Controls and Reserve Accumulation
• Financial Stability and Banking Regulation
• Fiscal Management (Debt and Deficits)
• Social Policies to Reduce Political Conflict
6
Exchange Rate Policies
• Following the hyperinflations of the 80s the hard
pegs were adopted as centerpieces of
stabilization
• After the collapse of the regimes floating rates
were implemented in the context of inflation
targeting
• However, there is active intervention in the FX
market – In practice there is a Managed Floating
Regime rather than a free floating.
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Exchange Rate Policies - Lessons
1. Futility of relying on Exchange Rates as the main
stabilization instrument.
2. Importance of Flexibility. Including the flexibility
to intervene and to impose restrictions. None of
the extreme regimes preserves competitiveness.
3. Importance of a good level of International
Reserves
8
MIB
Latin America: Exports
(in U$S Millions)
900.000
800.000
700.000
600.000
500.000
400.000
300.000
200.000
100.000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source; CEPAL
9
[email protected]
Latin America: Regional Terms of Trade
(yearly change - %)
10
MIB
Latin America: Evolution of the terms of trade
Total
South America
Source: ECLA (Cepal)
Central America
Mexico
11
[email protected]
Strong External Accounts
CURRENT ACCOUNT DEFICIT - AMLAT
Source: Institute of International Finance
12
MIB
Net Foreing Investment Direct in Latin America -2009
45%
44%
40%
35%
30%
Total: U$S 65.269 M
(30% less than 2008)
26%
23%
25%
20%
14%
15%
11%
10%
9%
9%
8%
5%
5%
5%
7%
4%
0%
Brasil
México
Chile
Colombia
Argentina
Perú
2008
Source: ECLA (Cepal)
2009
13
[email protected]
14
Financial Stability
• The Region Experienced Serious Banking
Crises in the Past and Learned the Lessons
• Stricter Banking Supervision and Less Use of
Sophisticated Complex Instruments
• Stricter Standards for Capital, Leverage, and
Liquidity Requirements
• Relatively Low Exposure to the Public Sector
15
EM: % Change in Bank Lending
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Bank Lending: Advanced vs. EM
(% change over year ago)
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Fiscal Prudence
18
Public Debt
19
Source: IIF
PUBLIC DEBT
(% of GDP)
113%
44%
Source: IIF
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Financing Needs, 2010
(% of GDP)
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MIB
Latina America: Public Debt
(in GDP %)
70
60
50
40
32%
30
20
10
0
2000
Source: ECLA (Cepal)
2001
2002
2003
2004
2005
2006
2007
2008
2009
22
[email protected]
MIB
Latin America: Fiscal Deficit
(in GDP %)
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
0
-0,5
-1
-1,5
-2
-2,5
-3
-3,5
-4
-4,5
-5
Source: ECLA (Cepal)
23
[email protected]
Brazil: Significant Progress in
Poverty Reduction
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Social Programs
• Inequality continues to be a problem but
social programs have reduced poverty and
largely increased the middle class.
• Social programs did not cause fiscal
imbalances
• Important reduction of Political Conflict
and facilitated introduction of structural
reforms
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THANK YOU!
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Source:IIF
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