Five themes that will shape Latin America’s outlook in 2022
We expect Latin America to return to low trend growth in 2022, as policy support is withdrawn and the easy gains from the reopening fade. LatAm’s recovery will continue to lag the rest of the world and remain uneven across countries. A disorderly withdrawal of fiscal support, however, could tip economies back into recession or lead to social unrest. To ensure borrowing costs do not rise further and that fiscal credibility does not come under questioning, countries will need to start running primary budget surpluses.
What you will learn:
- LatAm will continue to underperform the rest of the world as we exit the Covid-19 pandemic
- By H1 2022, we expect the reopening of high-contact sectors to be completed while nearly every country in the region will be facing shrinking policy impulses
- Once the withdrawal in 2022 of policy support begins to hit
consumer spending, there will be a temptation to turn temporary pandemic relief measures like cash transfers into permanent ones
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