The IMF makes a call to diversify the purchase of intermediate inputs abroad

The International Monetary Fund (IMF) makes a call to diversify the purchase of intermediate inputs abroad. A particularly relevant suggestion for Latin American countries, they stated.

Within one of the first three chapters of the World Economic Outlook (WEO for its acronym in English), explained that relocating production will help reduce the volatility of supply and limit vulnerabilities to a new shock.

They took the case of Latin American countries to emphasize that 82% of intermediate products in the region are supplied from domestic sources.

In the analysis, entitled Global trade and value chains during the pandemic / World trade and value channels during the pandemic, argued that “in a scenario of a 25% contraction in the labor supply of a major global supplier of intermediate inputs, it is observed that greater substitutability reduces the losses of GDP at about 80 percent.

In the analysis, focused on the health situation, they referred to the selective confinements applied recently in China as a reminder that the restrictions related to the pandemic still have an impact that goes far beyond the affected country.

Ending the acute phase of the pandemic is in the interest of all countries, including those with the highest vaccination rates.”

The chapter was launched from Washington, by the IMF economist, Adil Mohommad.

The full document will be available next Tuesday, April 19. It will include the flagship chapter of the global economic outlook and will be presented for the first time by the IMF’s new economic adviser, Pierre Olivier Gourinchas.


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