Latam outlook. Fourth Quarter 2014

Growth in LatAm will slow during 2014 and 2015. The region will grow by 0.9% and 1.8% respectively over these two years, due to a slowdown in domestic demand and a less favourable external environment. The Pacific Alliance will grow by 2.8% in 2014 and 3.8% in 2015. Given the greater cyclical weakness, the central banks are showing a looser approach than they were three months ago, except in the case of Brazil. Nevertheless, pressure to raise interest rates is expected in 2015, in line with the recovery and the rise in rates to be introduced by the Fed. Exchange rates will continue to depreciate across the region in 2015 against a backdrop of cheaper raw materials and the rise in interest rates by the Fed. The fiscal outlook has deteriorated, due to the slowdown in domestic demand. External deficits remain high, though they will start to fall in 2015. In general, both deficits remain sustainable.

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