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
Macroeconomics and Finance
Is There a Future for Digital Currencies Issued by Central Banks in Latin America and the Caribbean?
Boosting financial inclusion has long been essential in Latin America and the Caribbean, where more than 200 million people lack access to financial services and large numbers of citizens are unable to open a bank account because of poverty, geography, discrimination, and lack of proper identification. Alternative systems, however, could be transformative. They could be … [Read more...] about Is There a Future for Digital Currencies Issued by Central Banks in Latin America and the Caribbean?
Tackling Informality for Fiscal Health in the Post-Pandemic Period
After significant efforts by Latin American and Caribbean governments to shore up businesses and households during the COVID-19 pandemic, the region in 2021 had a very high average fiscal deficit of 5% of GDP, more than two percentage points higher than before the pandemic. It also had a soaring average debt ratio of 70% of GDP. The IDB’s recently released 2022 Latin … [Read more...] about Tackling Informality for Fiscal Health in the Post-Pandemic Period
Reactivating the Economy with Better Business and Household Credit
As the economies of Central America, Mexico, Panama and the Dominican Republic contracted steeply in 2020 in the face of COVID-19, their governments and central banks rose to face unprecedented challenges in maintaining liquidity and credit and keeping businesses and households afloat. They set lower policy rates and reserve requirements, devised more flexible regulations for … [Read more...] about Reactivating the Economy with Better Business and Household Credit
Boosting Trade to Alleviate Pressures from the Russia-Ukraine Conflict
When war broke out between Russia and Ukraine at the end of February, businesses and governments in Latin America and the Caribbean worried that the war's disruptions would cause significant harm to the region's trade. What now seems clear is that rather than being deeply harmed, Latin America and the Caribbean has a significant opportunity to step in, relieve supply … [Read more...] about Boosting Trade to Alleviate Pressures from the Russia-Ukraine Conflict