Growing middle class is presenting challenges.
I am looking forward to being in Peru this week to discuss economic and social developments with the government and a wide range of stakeholders—and also to follow up on the preparations for the next IMF–World Bank Annual Meetings, which will be held in Lima in October 2015.
Later this week, I will participate in the Santiago Conference in Chile, where I will meet policymakers and influential representatives from Latin America and the Caribbean to discuss economic approaches to strengthen the entire region.
As I travel to the land of the Andes, I am reminded of the natural beauty of the region, the richness of its culture, and its incredible diversity.
Despite its current challenges—growth continues to slow, as global economic and financial conditions are shifting and economies run up against capacity limits—I remain decidedly optimistic about the region’s potential to raise living standards while protecting its unique heritage and precious environment.
And I am also optimistic about the IMF’s partnership with Latin America. The Santiago Conference will be an opportunity to showcase our effective collaboration in many areas, and together with the Annual Meetings next year will cement our relations for years to come.
Great strides, but more to be done
During the past two decades, most countries in Latin America made great strides, including my host countries Peru and Chile. They were able to deliver strong growth, helped by sound policies and well-managed economies.
Think about how Latin American countries fared during the “stress test” of the 2009 global financial crisis: many were able to recover quickly without suffering their own crises, and with policy responses that helped to dampen the hit to growth and employment.
These countries are well aware that in our increasingly interconnected world, economies must be adaptable. This resilience will be all the more tested as growth slows. Our latest projections show that Latin America will grow by 1.3 percent in 2014 and 2.2 percent in 2015.
“ During the past two decades, most countries in Latin America were able to deliver strong growth, helped by sound policies and well-managed economies. ”
There is no question about it: Latin America has made significant advances in reducing poverty and inequality.
A decade or so ago, the proportion of people in poverty was about 2.5 times those in the middle class; today they are about the same. There is broad recognition, however, that more needs to be done.
Despite the striking decline in inequality in Latin America, it remains high relative to comparable economies elsewhere in the world. The rising middle class is placing increasing demands on public services like education, health care, and infrastructure.
Making progress in these areas will be more difficult than in recent years, as commodity prices decline and global interest rates pick up from unusually low levels.
To its credit, Latin America recognizes that these challenges need to be met while keeping a firm grasp on macroeconomic stability, which has been hard won with better policies.
The Santiago Conference presents a timely opportunity to discuss these kinds of issues. The two-day event will focus on three key themes:
- changes in global and regional economic conditions;
- social progress in Latin America and its implications for economic policy; and
- the potential role of region-wide solutions to long-standing problems.
First and foremost, however, the IMF wants to listen and learn. I am looking forward to exchanging views not only with the region’s top policymakers, but also with women leaders, youth, students, the press, and those dedicated to building more inclusive economies.
I hope that you too can join us in this dialogue. Follow the discussions on the conference website and send us your thoughts and questions by using the Twitter hashtag #imfsantiago2014.
Published in collaboration with IMF Direct
This article first appeared on the World Economic Forum blog on December 3, 2015 and was republished with permission.