Private investment has risen as a share of GDP in recent years, an important driver of the region’s impressive growth since 2003. Nonetheless, investment-to-GDP ratios remain below those in other regions. Moreover, investment has not increased uniformly across all countries. The rise in the aggregate investment-to-GDP ratio has been driven especially by increases in Colombia and Venezuela and by the recovery in Argentina. Private investment in other countries, such as Brazil and in the Caribbean region, has risen less over this period.
The world economy continues to be buffeted by the burgeoning downdraft of the financial crisis and volatile commodity prices. As such, the outlook points to a major downturn for the global economy, with growth falling to its slowest pace since the 2001–02 recession. However, authorities around the world have taken further, massive, and increasingly coordinated corrective actions. The central scenario in the IMF’s recently World Economic Outlook (http://www.imf.org/external/pubs/ft/weo/2008/02/index.htm) anticipates that these will be successful in stabilizing financial conditions. However, it will take time, under any rescue plan, to restore the proper functioning of credit markets. For the United States, our baseline projection is that recovery will begin in the second half of 2009, and will be more gradual than previous recoveries, because of the exceptional nature of the asset price adjustments taking place. Overall, growth in the advanced economies as a whole will also be close to zero at least until the middle of 2009.