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Regional Economic Outlook

October 2021 Regional Economic Outlook for Western Hemisphere - Cover

Western Hemisphere

Regional Economic Outlook: A long and winding road to recovery
October 2021

An economic recovery is underway in Latin America and the Caribbean (LAC) but the pandemic still casts shadows on much of the region. The recovery was robust in the first quarter of 2021 but lost momentum in some countries in the second quarter, reflecting the rebound in COVID-19 cases. Real GDP is projected to grow by 6.3 percent in 2021, followed by a more moderate growth of 3 percent in 2022, but would not catch up with pre-pandemic trends in the medium term as persistent weakness in labor markets raises risks of scarring. Broadly favorable external conditions, high commodity prices, and pent-up demand support short-term growth, while monetary and fiscal policy reversals work in the other direction. Risks to the outlook are tilted downward. Main downside risks are the emergence of more transmissible and deadlier COVID-19 variants, tightening of global financial conditions, sovereign debt rollover risks, and social unrest as a year with heavy election schedule looms. Fiscal policy should allocate sufficient resources for health spending, including vaccination, and continue to support households and firms in a more targeted fashion while the pandemic persists, backed by credible assurances of medium-term debt sustainability to maintain access to finance. Monetary policy has started to address inflationary pressures but should continue to support economic activity insofar as the dynamics of inflation expectations permit. Financial policy should shift from blanket support to targeted support of viable firms, to ensure that necessary labor and capital reallocations are not hindered. Supply-side policies should foster inclusive growth, including through progressive and growth-friendly tax reforms and measures to intensify climate change adaptation and mitigation.

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This web page presents information about the work of the IMF in Central America, Panama and the Dominican Republic, including the activities of the IMF Regional Representative Office. Additional information can be found on the IMF country pages of the enlarged Central American region (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and Panama), including official IMF reports and Executive Board documents in English and Spanish that deal with Central America as a region and with each of its countries.

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At a Glance

  • CA-7: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama and Dominican Republic
  • Costa Rica Joined the Fund on January 08, 1946
  • El Salvador, Nicaragua, and Panama Joined the Fund on March 14, 1946
  • Dominican Republic and Guatemala Joined the Fund on December 28, 1945
  • Honduras Joined the Fund on December 27, 1945
  • Total Quotas: Net cummulative allocation SDR 1,230.60 Million; Holdings: SDR 1,027.62 Million
  • Loans outstanding: ECF arrangements (Honduras and Nicaragua) SDR 132.54 Million;
  • Stand-by Arrangements (Dominican Republic) SDR 703.76 Million