South America Should Slow Demand to Avoid Overheating, IMF Says

South American governments face a risk of accelerating inflation and worsening trade deficits if rising domestic demand in the wake of the global financial crisis isn’t tempered, the International Monetary Fund said.

Driven by exports such as soybeans and copper, Latin American and Caribbean economies will grow 5.7 percent this year, led by an 8.3 percent expansion in Peru and 7.5 percent growth in both Argentina and Brazil, the IMF said in its Regional Economic Outlook today. In May, the Washington-based lender had estimated 4 percent growth in the region this year.