Too Early to Lower the Guard: How Will Latin America Fare If Macroeconomic Imbalances in Industrial Countries Intensify? (Event audio)

Latin America’s response to the global financial crisis has been remarkably strong. Effective use of fiscal, monetary and exchange rate policies allowed Latin America to fare better than other parts of the world and better than the region itself during previous global economic crises. But macroeconomic disequilibria in high-income countries—especially rising fiscal deficits and sovereign debt in the United States and parts of Europe—run the risk of becoming unsustainable.