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In September this year, the inflation rate slowed slightly, to 0.3% y/y, compared with 0.4% y/y in August. This is a very low level, far lower than the trend level of 1.6% since 2000.
In most Latin American countries, the current account went into the red after the 2008 crisis, with moderate, temporary deficits. Then, starting in 2011, it took another turn for the worse, and deficits spread across the region. The average current account balance as a percentage of GDP for Latin America fell from a 1.3% surplus in 2005 to a 2.6% deficit in 2013, and should fall further, to negative 2.8% in 2014.
Imports should also be slightly more dynamic, fuelled by the upturn in demand (2.5% after 2.4%). However, given the very gradual nature of moves to rebuild inventories and the ongoing adjustment in investment levels, import growth should stay below trend.
Continue to reduce public deficits, in order to meet EU commitments and gradually reduce the public debt ratio. This is very high, at 92.2% of GDP in 2013, and is likely to come out even higher in 2014, at 95.3% and at 97.2% in 2015 (official forecasts). It should only start to fall from 2017. The debt ratio should begin to ease from 2017, thanks to a further reduction in the deficit and slightly more sustained growth.
As depicted by a recent comparative study performed by PEW Research, the French are the more pessimistic on the economic outlook of their country than the Italians and are at the same level as the Greeks. By contrast, the British are among the most optimistic, despite the fact that their public finances are drifting worse than that of the French, but in a very different context, with 3% GDP growth and low unemployment.
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