IMF: Argentina will grow 6% in 2011

The LAC region has weathered the global recession well and must now contend with the policy challenges of managing two strong tailwinds—high commodity prices and strong capital inflows, the IMF reported today in its World Economic Outlook.

"In a number of the larger countries, the baseline forecast is for moderation of the rapid rates of growth experienced in 2010 and a level of output more in line with potential, but overheating is a significant risk," it added.

Activity expanded by about 6 percent last year, after contracting by 1¾ percent in 2009. Robust demand from China and rising commodity prices continue to underpin this strength. More recently, exports to other destinations have also bounced back. This has encouraged strong capital inflows and moderate current account deficits. Despite the support to current accounts from commodity prices, however, deficits are widening and are projected to continue widening on the back of robust domestic demand. The generally buoyant conditions are associated with rising inflation in South and Central America. On the other hand, Mexico is not facing overheating pressure at this time.

Growth in the region is projected to average 4¾ percent in 2011 and 4¼ percent in 2012. The growth rate for 2011 is two thirds percentage point higher than forecast in the October 2010 World Economic Outlook.