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Analysis

Latin America copes with change in world landscape

THE OMFIF MONTHLY BULLETIN - Press Release

2 February 2017, London

Cover HR

Latin America has been largely out of the headlines. But behind the scenes, the continent is going through a dynamic transition, as illustrated by the collection of articles accompanying this month’s Bulletin cover story.

David Smith writes the inaugural piece in a new OMFIF series on ‘World Leaders in 2017’, presenting the challenges and opportunities for Argentina’s President Mauricio Macri. Reforms and the resolution of corruption scandals will be vital for Brazil, argues Winston Moore, but the economic fundamentals remain sound. Colombia is more exposed to the vagaries of the international economy, argue Ricardo Adrogué, Brigitte Posch and Michael Simpson. President Nicolás Maduro’s demonetisation experiment in Venezuela has brought the economy into chaos. Steve Hanke proposes dollarisation as a potential solution.

This will become increasingly difficult, however, as the dollar gathers further strength. Darrell Delamaide suggests that it is likely that the Federal Reserve will tighten faster than the current dot plots suggest. Donald Trump’s expansionary policies would motivate such an approach, with more investment needed to reinvigorate the country’s infrastructure, argues Meghnad Desai. But, as Marsha Vande Berg reminds us, we should prepare for unintended consequences from changes in policy direction.

The third Focus report in our series on global financial centres profiles Singapore, the location of OMFIF’s Asia office. In an OMFIF interview, Ravi Menon highlights the advantages of Singapore as an international gateway. Ben Robinson and Adam Cotter emphasise its evolving role as a hub for renminbi trading and for Chinese companies looking to finance regional expansion.

Singapore’s appeal hinges on attitudes towards globalisation in Asia and the West. Antonio de Lecea proposes a model for East-West co-operation to promote globalisation while correcting for its distributional effects. China’s President Xi Jinping has emerged as the new proponent of globalisation, writes Adam Cotter. This has caused some to hail China as the new de facto world leader. However, when polled, the majority of our Advisers Network said it was too soon for China to take over from the US in world leadership.

Bank of Thailand Governor Veerathai Santiprabhob draws attention to the impact on inflation from changes in the structure of trade and rising competitive pressures.

Other highlights of the February 2017 edition:

  • David Marsh emphasises how changes in central banking personnel could play a role in Europe's mixed economic picture over the next three years.
  • Miroslav Singer notes the importance for central bankers to resist pressure to increase their inflation targets.
  • William Keegan remembers Sir Douglas Wass, who became a champion of freedom of information and a source of irritation for Margaret Thatcher’s government.
  • André Szász’s obituary, by Roel Janssen, reminds us of the reservations about the euro held by one of the architects of Europe’s common currency.
  • Rachel Pine reflects on the history of behavioural economics through the story of Daniel Kahneman and Amos Tversky in The Undoing Project by Michael Lewis, and William Keegan reviews Ken Clarke’s memoir Kind of Blue.

The Bulletin is available to OMFIF members, and to non-members on a subscription basis. To subscribe please contact membership@omfif.org.