ABBA NETWORK

In many countries, fiscal adjustment will require significant effort and, sometimes unprecedented. “With this prediction introduces Dominique Strauss-Kahn, IMF managing director, a report on the fiscal situation that was presented on Friday and whose findings urge resolute response on the part of developed economies to cut their deficits and debt. “If the public debt is reduced to pre-crisis levels, the potential for growth in advanced economies is reduced by 0.5% annually, a very high percentage when accumulates several years. ”

The study, which closed before the Executive Jose Luis Rodriguez Zapatero announced their adjustment and therefore do not take into account a deficit projected for Spain in 2015 of 7.7%, the highest of the countries developed. Only Japan, with 7.3% deficit is closer to Spain. In five years, and lack of action, the U.S., a nation heavily in debt and a huge gap in their state and federal government accounts, recorded a deficit of 6.5%.
Carlo Cottarelli, director of fiscal affairs of the Fund, reiterated on Friday during the presentation of this report that the measures adopted in Spain “are going in the right direction” and while acknowledging that there is a fear “that the fiscal adjustment stifle growth” because lower the consumption, this should not occur if the measures taken are credible. The theory is that it manages Cottarelli a credible adjustment may allow interest rates will not go off and generate less volatility.
Additionally, this expert said it is very important at the moment in which the adjustment occurs. “There is nothing wrong with expanding fiscal policy is necessary to stimulate growth and withdraw when you’re up.” “The adjustment is not easy but we have seen countries that have done so without destroying the growth.”

However, Cottarelli remained all the time on a theoretical level without addressing the Spanish plan because this week has started the annual review of the Spanish economy (known as Article IV), which requires a period of silence.
The debt in developing countries will increase to represent 110% of GDP in 2015 as in 2007, before the crisis exploded, was 73%. Projections of this international body to suggest that the debt level down to 60% of GDP in 2030 in advanced economies, the fiscal deficit should improve by 8.7 percentage points.

Cottarelli said that part of the adjustment is to reduce pension expenditure (in two years simply by increasing the retirement age), and cut health care costs. It also suggests cuts in public sector wages, social spending, fuel subsidies and less military spending. In addition to a determined fight against tax evasion, the IMF noted that there are indirect taxes that could be adjusted upwards.

Istanbul (Turkey), Oct 1 (EFE) .- The International Monetary Fund (IMF) has cut its growth forecasts for the Andean countries this year, but feels that, like the rest of Latin America, the group will show signs of stabilization and recovery in 2010.

In its report “World Economic Outlook, released today, the IMF maintains that all countries in the group will grow in the whole of 2009 less or nearly equal than expected six months ago.

In 2010, the GDP the region will increase more than forecast in the last report due to improved financial conditions globally and, especially in case of commodity markets.

In recent months, commodities exporters such as Venezuela, Colombia and Peru have blamed the fall in prices in international markets, with significant losses for countries highly dependent on energy exports, such as Bolivia and Ecuador.

But the recent spike in commodity prices has improved the prospects for the region, says the IMF report, which also stresses that the business and consumer confidence has increased.

However, the international organization said that the GDP of all countries in the group will contract in 2009 compared to last year and stressed that the pace of recovery will be uneven.

Peru, for example, stalled in the first half of 2009 after several years of strong growth, but its economy will improve during the second half of the current financial year.

Venezuela registered the highest rate of inflation throughout the Americas due to heavy government spending and loose monetary policy.

Where appropriate, the situation has worsened by the decrease in revenues from the sale of oil, which prevents the application of economic stimulus policies.

PERU .- The Peruvian economy will grow this year by 1.5 percent, two percentage points less than expected six months ago and 5.8 percent in 2010.

Peruvian Inflation will be 3.2 percent in 2009 to drop to 2.0 percent in 2010 compared to 5.8 percent in 2008.

Lastly, record current account deficit of 2.1 percent of GDP in 2009 and 2.3 percent in 2010, below the 3.3 percent deficit of GDP 2008.

COLOMBIA .- The GDP Colombia in 2009 will shrink by 0.3, compared to zero percent forecast in the last report and 2.5 percent in 2008. In 2010 growth is 2.5 percent, above the 1.3 percent forecast six months ago.

Inflation for this year stands at 4.6 percent, before falling to 3.7 percent in 2010, down 7 percent from 2008.

Regarding the current account deficit, the IMF predicts will be placed this year at 2.9 percent GDP and 3.1 percent next, compared with 2.8 percent of 2008.

ECUADOR .- Ecuador’s economy will shrink this year by 1 percent, the only case in which the IMF improves prognosis compared with 2 percent decline announced in April.

In 2010, the GDP improve slightly with a rise of 1.5 percent versus 1 percent estimated six months ago.

For this year, the IMF forecasts an inflation rate of 5 percent and 3 percent in 2010, down from 8.4 percent in 2008.

The news is negative for the current account, for the Ecuadorian economy will have a deficit of 3.1 percent and 3 percent in 2010, compared with a surplus of 2.3 in 2008.

BOLIVIA .- The GDP Bolivia can not repeat this year growth of 6.1 percent in 2008 but will grow at least 2.8 percent in 2009 and 3.4 percent in 2010.

In its April report, the fund had estimated an increase of 2.2 percent for 2009 and another 2.9 percent in 2010.

The inflation rate will improve compared with 14 percent of 2008, it stood at 4.3 percent this year and 4.5 percent next.

Bolivia will achieve a surplus in its balance of payments of 1.1 percent of GDP in 2009, increasing to 1.3 percent in 2010.

VENEZUELA .- The 4.8 percent growth recorded by the GDP Venezuela in 2008 was not repeated in 2009, in which the economy will contract by 2.0 per cent, or 2010, with expected decline of 0.4 percent.

Six months ago, the IMF predicted a decline of 2.2 percent this year and another 0.5 percent in 2010.

Venezuela will post double-digit inflation, with rates of 29.5 percent in 2009 and 30 percent in 2009, lower, however, expected to last six months.

Despite what is stated in the last report, the Venezuelan economy will maintain its current account surplus, although it will be of only 1.8 of GDP this year. In 2010, it increased to 5.4 percent.