San José, Costa Rica, since 1956

Economy Growing, but IMF Still Calls for Caution

The International Monetary Fund (IMF) predicted a 3.5 percent growth rate for Costa Rica in 2010. In addition, the IMF expects overall growth in Latin America to increase by 4 percent this year. Latin America’s economy contracted by 1.8 percent last year.

The faster-than-expected rate of growth should benefit Latin America overall, said Nicolas Eyzaguirre, director of the IMF Western Hemisphere Department, in a press release. But Latin American governments need be aware that rapid growth runs the risk of a boom-bust cycle.

The next step, according to the IMF, is to ensure Latin American countries know how to handle this growth, and not have it lead to another contraction.

“An important message of our analysis is that policies can either mitigate or amplify the eventual risks associated with easy external financing,” said Eyzaguirre. “So the decisions taken by policymakers right now are very important to avoiding trouble later.”

–Matt Levin

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