 All right. Well, I think we can get started. Good afternoon, everybody. Thanks for being patient. My name is Carl Meacham. I'm the Director of the Americas Program here at CSIS, and I want to give you all a welcome here to another, what I think will be a really great session. This is the second of a two-part series on the IMF's regional economic outlook for the Western Hemisphere. The report, which came out six months ago, is this year's installment in an annual series that breaks down economic predictions and expectations for every major region in the world. We launched that report here last summer. Many of you were at that event, and now six months later, this afternoon's event will serve as an update on that earlier exercise. When we first launched the IMF's report in June, the outlook for Latin America was mixed. Global growth was on the rise, but economic activity in Latin America and the Caribbean was expected to stay in low gear, so to speak. Still regional growth was expected to hit about 2.5%, with a modest increase to 3%, which was expected for 2015. But many of these statistics and the outcome has been very different, with a growth rate being under 2.5%, or averaging 2.7%, predicted as well for the next five years. So there's a lot to talk about, and in short, Latin America's growth is below expected levels. The speakers today will talk about the why that is happening. Investment in the region has also been falling since 2011 and is set to fall even more this year. And as a result, among other factors, Latin America's annual growth for 2014 would be just about 1.1%. The lowest level in five years, according to the UN's latest estimates. So an uneven recovery from the global economic crisis, falling commodity prices, financial uncertainty, and problems with external demands are all relevant to growth prospects as well, and all have played a role in Latin America's slowdown. So today, we're going to explore why this is occurring, and we're going to take something of a comparative approach as well, addressing some key questions. Does this slowdown, for example, reflect a synchronized slowdown across all emerging economies? Why is this slowdown happening and why is it happening now? And are we talking about a demand deficiency, or are the regions economies hampered by capacity constraints? Those are some of the questions that we're going to try to answer today. The folks that we have here will address this and provide their take on what we might see in the region in the coming year. Krishna Srinivasan is the deputy director of the Western Hemisphere Department at the IMF. He oversees the production of the regional economic outlook. He's worked in various other departments at the IMF. He holds a PhD in international finance, and he's published widely both at the IMF and in leading economic journals. I'd like to welcome you. Hamid Farouki is the chief of the regional studies division in the Western Hemisphere Department at the IMF. He's been with the IMF since 1993, and he's worked in various capacities across the organization. He holds a PhD from Princeton, where he also served as a lecturer. I'd like to welcome you as well. And my good friend, and it's becoming sort of a habit now to tip into the resources here that are so abundant at CSIS, but in particular with pleasure and joy, and it's a luxury to have Dan running my good friend as a discussant with this event, and he will be the discussant after the two speakers' remarks. Dan holds the William Shrier Chair in Global Analysis and is the director of CSIS's project on prosperity and development. Previously, he worked for the IFC as well as with Citibank and the Bank of Boston, so I'd like to welcome you too as well. After my remarks, Dr. Serena Vasen and Farouki will deliver their opening remarks accompanied by a PowerPoint presentation. Dan will then serve as the discussant of this event. And I'd like to remind all of you that we're on the record and that we look forward to sort of a lively conversation on these issues. Hopefully, we can address the more pressing issues having to do with why this is happening in the region, why is the region slowing down. I just want to thank you guys again for coming. I know it's pretty cold outside and you guys all coming is very appreciated. So without further ado, Dr. Serena Vasen. Christian, that's fine. Okay. Come on, Dan. We're up. Thanks. Welcome. Thank you. Thanks a lot. Thanks, Carl. And thanks, Dan. It's a pleasure to be here. So we have at the IMF, the MSF department, we produced the regional economic outlook twice a year. And this year we did one in October. And copies of that are available on our website. We also have a book forth coming on Latin America, which might give some interest to you. So let me just go over how we see Latin America, what are the challenges they face going forward and what could be the appropriate policy responses. So basically, if you look at this chart here, you had over the first 1990s to 2003, growth in Latin America was about 2.6%. And then you had a very strong pickup in growth, which many people refer as a golden decade, where growth was about 4.2% on average. And now what we see is growth is coming down very sharply. And if you take the projections forward in the world economic outlook, we are going to go back to the growth rates we had in the past, which is about 2.7%. So the question is, where is the slowdown coming from? If you look at the slowdown, it's coming down to the growth rate that we're generating from South America. And here you see countries there, if you look at Argentina, Venezuela, Brazil, all the growth rates for all these economies have been marked down quite significantly. In fact, I would say that in the last world economic outlook, the region which got its growth revisions marked down the most was this region, Latin America and the Caribbean. And again, you can see here the growth rates, 14%. Again, and if you look at Chile, it's come down. So across the region it's come down, but particularly pronounced in South America. Now why do we see this? Again, here I would say there are two key reasons why we see growth slipping. One is investment has come down very sharply and real export growth has again come down very sharply. Now, when you talk about investment, again, this is an area where we at the IMF in the past have been a bit optimistic. Given where commodity prices were, we are pretty optimistic about how growth would pick up because of going to investment. And that we have not seen. So investment is slowing down quite sharply and you can also see real exports come down again very sharply. Now this is in large part related to the ending of a commodity boom. Now commodity prices have been down quite sharply and then you see the growth pick up, but since 2011 commodity prices have kind of stabilized or have come down quite sharply. This was led initially by metals, but now it's come oil and now it's food. So across the board you see a slump in commodity prices and prospects in Latin America have historically been linked to commodity prices and you can see that again being repeated here. And both, if you look at the terms of trade and how that maps on investment, you can see the clear correlation as terms of trade are deteriorated, investment has come down, growth has come down. Now again, this chart is on the left-hand side, you see what the chart there is. We look at our projections we made in 2011 and compare that to where we are today, say in October 2014. And you can see that if you take as 100 as the share between 11 and 14, GDP numbers have been revised on very sharply. And the red line and the blue line here at the bottom tell you the main reason, fixed investment has been revised down very sharply. It's been much less, it's been much more optimistic about investment than what reality has been. And that's why investment and exports explain how the prospects have come down sharply. It saw so much in terms of trade. If you look at the right-hand side chart here, these numbers very indicate that our projections about terms of trade were not too much off the mark. But what we got wrong was the impact of how terms of trade would affect investment. So what we find in analysis is investment responds more to how prices keep going up. As prices keep going up, you see investment going up. The minute prices stabilize, you see investment also coming down sharply. So that's the thing where we did not, our projections on the terms of trade were broadly fine, but investment and exports is where we were pretty optimistic. Now, again, these are external factors. commodity prices clearly have a bearing on prospects in the region. But they've also been domestic factors. What are the domestic factors here? When these economies were growing very sharply in what we call the golden decade, they ran up towards a capacity. So now you see unemployment being very low in many of these economies. So this slack is very limited in these economies. So going forward, the question is, can they grow because they have slack? The answer is slack seems to be coming down very sharply. Here, the dot shows unemployment rates. You can see how low they are across the region, across most countries in the region. Unemployment is very low, and that speaks to capacity constraints going forward. And again, what we've seen on the, and you can see the right-hand side, is when these economies are growing very sharply, there was a huge disconnect between productivity and real wages. That again shows, can these countries be competitive going forward? And again, I'll talk about policy, when you talk about policies, the area where this region really needs to back up is on improving productivity. I'll end up with that in a minute. Now, there's some kind of a disconnect between growth prospects, growth outcomes, real outcomes, and financial outcomes. Equity markets have held up quite well for most part. Exchanges have depreciated more recently. And the U.S. bond is again just as a comparison. So financial markets have done reasonably well. But there's a disconnect between the real outcomes and the financial outcomes. And policy rates have been able to adjust. These countries have had the room to adjust policy rates as growth slipped. For instance, if you look at Chile, if you look at Mexico, if you look at Peru, they've all cut rates. They've had the space to cut rates to bolster growth. And where they had to tighten, they have tightened, for example, in Brazil. But going forward, the question is, what do they need to do? Now, here is one, again, the question is, when you have strong growth, what do you see? Are these countries, are the banking systems in good shape? This chart here tells you on the left-hand side, if you look at the financial sector, if you look at headline numbers for the banking system, it looked pretty good. On that chart on the left-hand side, if you're on the diagonal, it basically says, what were the average capital ratios between 2011 and 2013?