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From Rapid Recovery to Slowdown: Why Recent Economic Growth in Latin America Has Been Slow

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  • Jose De Gregorio

    (Peterson Institute for International Economics)

Abstract

Latin America's recent economic performance has been disappointing. After a very strong recovery from the Great Recession, growth has slowed considerably, and prospects for 2015 are dim. Among the seven largest economies in the region, output is expected to contract in Argentina, Brazil, and Venezuela, and Chile, Colombia, Mexico, and Peru are projected to grow by only about 3 percent. The decline was not caused by external factors but was mostly cyclical in nature and a result of low productivity. Although monetary and fiscal policies may still have a role in supporting demand in some instances, the main problem in the region is not a lack of demand but low productivity growth. Efforts must be made to foster productivity. Institutional weakness must be addressed and inequality reduced if sustainable high growth is to resume.

Suggested Citation

  • Jose De Gregorio, 2015. "From Rapid Recovery to Slowdown: Why Recent Economic Growth in Latin America Has Been Slow," Policy Briefs PB15-6, Peterson Institute for International Economics.
    • Handle: RePEc:iie:pbrief:pb15-6
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    References listed on IDEAS

    as
    1. José De Gregorio & Felipe Labbé, 2011. "Copper, the Real Exchange Rate and Macroeconomic Fluctuations in Chile," Working Papers Central Bank of Chile 640, Central Bank of Chile.
    2. Bank for International Settlements, 2008. "Transmission mechanisms for monetary policy in emerging market economies," BIS Papers, Bank for International Settlements, number 35.
    3. Jorge Fornero & Markus Kirchner & Andrés Yany, 2015. "Terms of Trade Shocks and Investment in Commodity-Exporting Economies," Central Banking, Analysis, and Economic Policies Book Series, in: Rodrigo Caputo & Roberto Chang (ed.),Commodity Prices and Macroeconomic Policy, edition 1, volume 22, chapter 5, pages 135-193, Central Bank of Chile.
    4. Lant Pritchett & Lawrence H. Summers, 2013. "Asia-phoria meet regression to the mean," Proceedings, Federal Reserve Bank of San Francisco, issue Nov, pages 1-35.
    5. Bertrand Gruss, 2014. "After the Boom–Commodity Prices and Economic Growth in Latin America and the Caribbean," IMF Working Papers 2014/154, International Monetary Fund.
    6. William R. Cline, 2013. "Estimates of Fundamental Equilibrium Exchange Rates, November 2013," Policy Briefs PB13-29, Peterson Institute for International Economics.
    7. Roberto Alvarez & José De Gregorio, 2014. "Understanding Differences in Growth Performance in Latin America and Developing Countries between the Asian and the Global Financial Crises," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 62(4), pages 494-525, November.
    8. William R. Cline, 2013. "Estimates of Fundamental Equilibrium Exchange Rates, May 2013," Policy Briefs PB13-15, Peterson Institute for International Economics.
    9. Giang Ho & Paolo Mauro, 2016. "Growth—Now and Forever?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(3), pages 526-547, August.
    10. Giang Ho & Paolo Mauro, 2014. "Rapid Growth in Emerging Markets and Developing Economies: Now and Forever?," Policy Briefs PB14-26, Peterson Institute for International Economics.
    11. José De Gregorio, 2014. "How Latin America Weathered the Global Financial Crisis," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 6789, April.
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    Cited by:

    1. Luis N. Lanteri, 2015. "Efectos de la enfermedad holandesa ('Dutch disease'). Alguna evidencia para Argentina," Revista de Economía del Rosario, Universidad del Rosario, vol. 18(2), pages 187-209, December.
    2. José De Gregorio, 2018. "Productivity in Emerging Market Economies: Slowdown or Stagnation?," Working Papers wp471, University of Chile, Department of Economics.
    3. Patrick Blagrave & Marika Santoro, 2016. "Estimating Potential Output in Chile: A Multivariate Filter for Mining and Non-Mining Sectors," IMF Working Papers 2016/201, International Monetary Fund.
    4. José De Gregorio R., 2016. "A 25 Años de la autonomía del Banco Central: Algunas lecciones de política," Central Banking, Analysis, and Economic Policies Book Series, in: Alberto Naudon D. & Luis Álvarez V. (ed.),25 Años de Autonomía del Banco Central de Chile, edition 1, volume 23, chapter 5, pages 089-100, Central Bank of Chile.
    5. Aqib Aslam & Samya Beidas-Strom & Mr. Rudolfs Bems & Oya Celasun & Zsoka Koczan, 2016. "Trading on Their Terms? Commodity Exporters in the Aftermath of the Commodity Boom," IMF Working Papers 2016/027, International Monetary Fund.

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