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We examine the relationship between a country’s level of investment in research and development (R&D) and financial stability. Our findings emphasize the importance of a balanced fiscal strategy that reconciles the urgency of short-term fiscal consolidation with the pursuit of long-term economic growth and productivity.

Fiscal policy can significantly impact the rate of inflation in Latin American countries. Governments in the region have historically implemented procyclical fiscal policies, increasing spending and borrowing during periods of economic growth and tightening policies during recessions.

Latin America faced a mixed economic outlook in 2024 amid a slight global economic slowdown driven by geopolitical tensions and uneven performance among major global economies. The region’s economic growth outpaced initial projections (2.3% compared to 1.8% forecasted), supported by resilient external capital flows, robust financial systems, and monetary policies that helped bring inflation closer to target levels.

The 9th High-level Regional Financing Arrangements (RFAs) Dialogue was held on 23 October 2024 in Washington DC at a time when the global economic outlook is improving but remains weak amid a complex geoeconomic environment and elevated policy uncertainty. The heightened volatility observed in global financial markets over the summer rearmed the importance of having a strong Global Financial Safety Net, including eective collaboration between the International Monetary Fund (IMF) and RFAs, to safeguard against external risks.

Working paper in academic journal Term Spread Spillovers to Latin America and Emergence of the ‘Twin Ds’ Carlos Giraldo, Iader Giraldo, Jose E. Gomez-Gonzalez, Jorge M. Uribe. See academic journal

To date, in 2024, the economy of Latin America has continued its macroeconomic adjustment process; the GDP growth is lower than that in 2023, which is accompanied by a decline in the current account deficit of the balance of payments and inflation