Latin America: Dollarized Countries See Lowest Inflation

Ecuador, El Salvador and Panama among the inflation winners.

BY JOACHIM BAMRUD

While Argentina’s government continues to struggle with inflation, three Latin American countries that use the dollar as their legal tender are among the winners in terms of keeping consumer price rises in check.

Ecuador, El Salvador and Panama will have Latin America’s lowest inflation rates this year and over the next five years, along with Peru, which has long been known for its successful monetary policies and does not use the US dollar, according to a Latinvex analysis of new projections from the International Monetary Fund (IMF).

Meanwhile, Argentina -- along with basket case Venezuela – will continue to suffer from Latin America’s highest inflation this year and again during the 2018-2011 period, according to our analysis.

Currency expert Steve Hanke -- a professor of applied economics at Johns Hopkins University -- has long advocated dollarization as a way for countries like Argentina and Venezuela to dramatically reduce inflation almost immediately.

“If Argentina would dump the peso and adopt the greenback, inflation would end immediately,” he has told Latinvex.

Hanke also recommends a similar measure for Venezuela.

“Countries that are officially dollarized produce ...

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Keywords: Argentina, Bolivia, Brazil, Chile, Colombia, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, Venezuela

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