despite the “headwinds”” that suffers Latin America In the wake of inflation, high interest rates and global economic weakness, the region is heading towards a “cyclical upturn” at the end of the year that will last through 2024, according to the Intelligence Unit of the British group The Economist.
Analysts anticipate that in the coming months inflation will begin to moderate and Latin American central banks will cut rates, although the region’s joint Gross Domestic Product (GDP) will grow “only” 1.3% in 2023.
During a virtual conference, The Economist experts anticipate that Brazil, Chile and Peru will lower their interest rates in the second half of this year, followed by Colombia and Mexico next year.
“This will be the seed of a cyclical upturn in the economy that will extend to 2024“, he claimed Robert WoodChief Economist at the Intelligence Unit for Latin America and the Caribbean.
With everything, “without progress on productivity-boosting reforms, we don’t expect a stellar year either”, stressed the analyst, who anticipates growth of between 2% and 2.5% in 2024.
The decisions made by the central banks of large countries such as Brazil and Mexico will mark the mood of investors, said Wood, who stressed at the same time that countries like Costa Rica and Uruguay have already led the way with rate cuts.
the intelligence unit of The Economist At the same time, he highlighted that Foreign Direct Investment (FDI) in Latin America rebounded in 2022 to its highest level in a decade.
Investments that were delayed by the COVID-19 pandemic, together with the high price of raw materials, have contributed to that boomsaid the analyst Erica Fraga.
As a third determining factor for this increase in investment, Fraga He pointed to the tendency for US firms to bet on closer production points, given the geopolitical tensions in the Pacific and global problems in supply chains.
“This has been particularly evident in Mexico, due to its proximity to the United States, but we believe that other countries in the region may be benefiting or may potentially benefit.”, added the expert.
The diversification of some Latin American economies regarding raw materials has also been “positive” for the regional economy, he stressed.
Source: EFE
Source: Gestion
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