Latam | Economic normalization amid an uncertain environment

Summary

The last months of 2024 gave some glimpses of the challenges Latam could face in the coming years. However, looking beyond the first quarter of 2025, some—albeit not all—of these warning signs have faded.

Key points

• Key points:
• Currencies deteriorated sharply, accompanied by increases in risk premia and sovereign debt rates, all owing to the imminent election of Donald Trump as US President.
• Amid this heightened uncertainty, the region continues to steer a course toward economic normalization.
• Inflation, which rose sharply in the wake of the pandemic, reached more moderate levels in 2024 and most economies are expected to reach their targets between 2025 and 2026.
• Growth shows signs of improvement overall, with the region’s average growth reaching 2.1% this year and 2.2% next year, figures around the pre-pandemic average and better than the 1.8% recorded in 2024.
• Lastly, the main differences can be seen in interest rates. Although rates are steadily coming down in most economies, the speed and levels are significantly different, recognizing, among many other factors, the speed at which inflation retreated.

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