Latin America Key Themes 2024 – Slower growth, but it’s not all bad news

Overall, we think four key themes will dominate the outlook for Latin America in 2024.

What you will learn:

1. Growth in most LatAm economies will be below consensus. Economic momentum has surprised to the upside through most of 2023, but the full effects of record global and domestic monetary tightening are yet to be seen.
2. Inflation will continue to cool faster than markets expect, but most central banks will still miss their targets. Fading distortions in core prices will take over from the initial disinflationary push caused by falling imported inflation. However, adverse weather conditions and geopolitical tensions in the middle east could revive non-core price pressures.
3. Central banks will cut rates faster than markets expect. Markets will change their view of permanently-tight monetary policies once the Fed start to soften its tone.
4. Most countries plan to slow fiscal consolidation efforts with their 2024 budgets. Mexico’s fiscal position will worsen substantially as AMLO plans an electoral spending spree. Debt in the short term will be manageable for most, but soaring borrowing costs will add medium-term risks.
5. We are much more optimistic than markets on sovereign risk in four economies: Colombia, Mexico, Ecuador, and Dominican Republic.