Growth will broadly increase as Latin America policy rates normalize

GDP growth among Latin America’s largest six economies will improve on the margin next year and surprise the consensus to the upside. Base effects and reconfiguration of domestic demand will support growth even as household income drivers point to a consumption slowdown.

What you will learn:

• We forecast stable GDP growth for Brazil, at levels slightly above its pre-pandemic average, but our forecasts for Chile, Colombia, Mexico, and Peru will fall short of their averages. Argentina’s two-year recession will give way to a sharp GDP growth rebound.
• Disinflation has ended, and we expect most countries’ inflation to stabilize around the upper target ranges in 2025. That said, supply shocks to fresh food prices caused by adverse weather and idiosyncratic energy policies pose an upside risk to our outlook.
• We believe central banks will remain cautious as resilient growth could slow inflation from a faster target convergence. However, we expect most central banks to be less hawkish than what markets think.