Last November, the International Monetary Fund revised its economic outlook for 2009. In the case of the six largest economies of Latin America, the growth projection was lowered from 4 to 3 percent. Two months later, this projection seems overly optimistic. In fact, data released in the first weeks of the year suggest a much sharper than expected deceleration in industrial production during the last months of 2008. The same is true for consumer confidence. Indeed, relative to a year before, industrial output fell by 15.1 percent in Argentina, 6.2 percent in Brazil, 5.7 percent in Chile (all figures for November), and 2.7 percent in Mexico (in October). The decline in consumer confidence has been particularly fast. A 15 to 20 percent reduction in consumers’ perceptions (since mid-2008) is the norm in these countries.
When one thinks about capital controls in Latin America, Chile is the country that usually comes up to mind. Colombia has also been a “champion” in these types of distortions. Since 1998 Colombia has had three rounds of bureaucratic creativity on capital controls. From 1998 to 2000 and from May 2007 until today, controls have […]
The Ministry of Finance recently presented to Congress the budget law proposal for 2008. The project will be debated during the rest of the semester and most likely will be approved sometime in early December. There are at least four points that are worth noting in this proposal. First, the government’s effort to consolidate the military […]