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 noted.
Within one of the first three chapters of the World Economic Outlook (WEO), they explained that relocating production will help reduce supply volatility 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, they argued that “in a scenario of a 25% contraction of the labor supply of a major global supplier of intermediate inputs, it is observed that greater substitutability reduces GDP losses by approximately 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 IMF economist Adil Mohommad .
The full document will be available next Tuesday, April 19. It will include the flagship chapter of the world economic outlook and will be presented for the first time by the new IMF economic adviser, Pierre Olivier Gourinchas .