Growth Returns to Latin America and Counter-Cyclical Policies Increase

In a positive development, today more than ever before, Latin American and Caribbean countries are pursuing counter-cyclical fiscal policies - spending more in bad times and saving in good times, according to a new World Bank semiannual report for the region. "Leaning against the Wind: Fiscal Policy in Latin America and the Caribbean in a Historical Perspective" argues that the transformation is significant for a region that has often pursued pro-cyclical spending – increasing the risks of overheating economies during boom times and making recessions deeper during the bad times. According to the Consensus Forecasts, Gross Domestic Product in the region is expected to grow by 1.5 percent this year and 2.5 percent in 2018, putting an end to six years of an economic downturn, including recession over the past two years. If they materialize, recoveries expected in Brazil and Argentina will largely fuel the return to growth in the region. Mexico’s growth is expected to hover at around 1.4 percent, while Central America and the Caribbean will maintain steady growth of around 3.8 percent.