Latin America Economic Forecast

Economic Snapshot for Latin America

January 19, 2021

Regional economic activity should bounce back this year as the gradual lifting of restrictions buttresses domestic and foreign demand . That said, the outlook remains clouded by several downside risks, including social unrest in several countries, elevated unemployment, deteriorated fiscal metrics, further flare-ups of the virus and a potentially slow vaccine rollout.

Latin America Monetary & Financial Sector News

Regional inflation held steady at November’s 6.1% in December, as higher increases in consumer prices in Brazil, Chile and Colombia offset somewhat softer price pressures in Mexico, Peru and Uruguay. This year, inflation should gain steam on the back of recovering economic activity and accommodative monetary policy stances.

Monetary authorities in Brazil, Chile, Colombia, Mexico, Paraguay and Uruguay held their benchmark rates steady at or near record lows at their December meetings, while the Central Bank of Peru also stood pat at its first meeting of this year. In 2021, central banks across the region are expected to maintain loose stances.

Most regional currencies weakened against the USD in recent weeks, most notably the Brazilian real and Colombian peso—the former due to concerns over the pandemic and public finances, as well as a slow reform agenda, and the latter owing to a drop in crude prices. Meanwhile, currencies in Chile and Mexico gained strength. Overall, currencies are seen depreciating ahead.


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Latin America Economic News

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