As the COVID-19 pandemic faded in 2021, markets expressed optimism in the worldwide economic outlook and capital flows to emerging markets recovered. It was not to last. The central banks of developed economies are now mopping up the abundant liquidity they had in place since the Great Financial Crisis to fight inflation in their own countries. Geopolitical risks in 2022 have … [Read more...] about Foreign Investment Drops and Concerns Rise in Latin America and the Caribbean
Macroeconomics and Finance
Why Remittances Soared as the Pandemic Raged
Remittances – money sent from migrants working abroad to families in their home countries – are a major source of income for many in Latin American and the Caribbean, representing as much as 20% of the GDP in nations such as El Salvador, Honduras, Haiti, and Jamaica. As occurred after the 2008 global financial crisis, remittances typically dry up in the wake of economic … [Read more...] about Why Remittances Soared as the Pandemic Raged
The Impact of War on External Financing in Latin America and the Caribbean
Since March of 2022, the war between Russia and Ukraine has significantly impacted the global economy, affecting recovery from the COVID-19 pandemic and reducing or halting growth in most of the world's regions. By disrupting the supply of agricultural and energy commodities, it has also fuelled inflation, which was already running hot before the war broke out. Latin … [Read more...] about The Impact of War on External Financing in Latin America and the Caribbean
Avoiding Economic Long-COVID: Policies to Support Firms and Workers in Latin America and the Caribbean
During the peak of the COVID-19 crisis, governments in Latin America and the Caribbean aided firms and households with support packages coordinated with central bank monetary policy. For many, liquidity injections and flexible financial sector supervision helped ease the pain. While many small firms closed their doors during the crisis, surprisingly few larger … [Read more...] about Avoiding Economic Long-COVID: Policies to Support Firms and Workers in Latin America and the Caribbean
Lessons from the Lost Decade for Confronting Inflation Today
Inflation in Latin America is currently running at its highest level in 15 years. With uncertainty about how it will unfold, the expectations of people and firms are largely de-anchored, meaning distinct from the central banks’ target levels, and thus a potential source of even greater inflation. Meanwhile, as world interest rates rise, countries in the region are finding it … [Read more...] about Lessons from the Lost Decade for Confronting Inflation Today