Latin America Economic Forecast

Economic Snapshot for Latin America

September 12, 2019

The region’s growth prospects were chopped for a fifth consecutive month in September, chiefly on deteriorating expectations for Argentina, Chile, Mexico and Peru. Headwinds from global trade tensions, slowing activity in China, downbeat confidence, subdued commodities prices and Argentina’s crisis will limit momentum this year. 

LATAM Monetary & Financial Sector News
 

Preliminary data revealed regional inflation came in at 7.7% in August, slightly above July’s revised 7.6%. Weak economic dynamics has helped keep inflation in check in several economies, with the stark exceptions of Argentina and Venezuela. Regional inflation is seen ending the year around current levels. 

Several central banks chopped interest rates in recent weeks against the backdrop of weak economic activity and moderate inflation. Policymakers in Brazil, Chile, Mexico and Peru all cut rates at their latest meetings. Meanwhile, amid a plunging peso and financial storm, Argentina’s officials unveiled capital controls in September to calm markets. 

Argentina’s peso plummeted against the USD in August amid a confidence crash after President Macri lost the primary election by a wide margin. Spillover effects from Argentina’s crisis and general risk aversion hit nearly all of the rest of the region’s currencies, with Brazil’s real being particularly hard-hit. In September, however, most currencies regained some lost ground. 


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