Latam | Low growth: not just a fleeting phenomenon

In recent years, the main economies of Latin America have successfully achieved a rapid and marked adjustment in their monetary policy in an attempt to curb rising inflation. Today, most of them have inflation at around their average for the last 10 years.

Key points

• Key points:
• This massive effort has come at a high cost, as the region grew by just 1.9% in 2023, below the global average of 3.2%, and in 2024 growth is expected to be even lower, at 1.5% compared to 3.1% globally.
• In this context, central banks have been pressing ahead with their rate cutting cycle over the last year and a half, bringing the spread with the Federal Reserve rates to levels below the average for the last 10 years in most cases, with the exception of Colombia and Mexico, which have a more gradual and lagged cycle of rate cuts.
• Meanwhile, inflation will continue to fall across the region, as it draws closer to the targets set by the various countries in 2025, albeit with certain differences. At one end of the spectrum, we have Colombia, with higher and more persistent inflation, and on the other, Chile and Brazil, which, after achieving significant reductions in inflation, have seen it tick upward of late.
• With a more structural outlook, Latam should be able to build some economic momentum from 2025 onwards, when it will reach growth of around 2.3%. It should then maintain this pace over the following years, albeit below the global average.

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