Research Insights: External Crisis Vulnerability in Latin America and the Caribbean: Is the Glass Half-Empty or Half-Full?

Quantifying risk tradeoffs between different external balance sheet exposures, macroeconomic fundamentals, and global shocks is key to gauging the risk of external crises. This study highlights the need for the countries in the region to carefully manage their external portfolios and buffers. Despite progress, there is ample room for Latin America and the Caribbean to reduce their external crisis vulnerability through strategic risk management policies.