The authorities in most Latin American countries have space to loosen policy in the event of a sharp slowdown in global economic growth. Indeed, we expect to see policy easing in most economies over the next 6-12 months. Yet while a global downturn on the scale of the post-Lehman fallout seems unlikely, if external conditions do deteriorate more rapidly than expected, it is worth noting that policymakers will have less room for manoeuvre than in 2008/09.
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