Latin America Economic Outlook. Fourth quarter 2019

Summary

Latin American GDP will grow 0.7% in 2019, and recover moderately in 2020

Key points

• Key points:
• Latin American GDP will grow 0.7% in 2019, less than expected three months ago and below the rate observed in the previous two years. In addition to the less favorable global context the higher uncertainty on both the political environment and economic policies in most countries of the region will affect economic activity. Growth will rebound moderately in 2020, but will remain below world growth.
• Growth will slow down this year in all the economies of the region, with the exception of Colombia where GDP expansion will converge to 3% from 2.8% in 2018. The recession will be more intense than expected in Argentina and GDP will grow less than 1% in Mexico, Brazil and Uruguay.
• Despite the expected moderation and downward revisions, Peru and Chile show some resilience; in both growth will reach 2.5% in 2019. In 2020 we expect a recovery of growth in practically all the countries of the region, but this rebound will be smaller than expected three months ago.
• The lack of demand pressures and low global inflation keep inflation in general under control, with Uruguay and mainly Argentina being the exceptions. Although regional currencies show some weakness in an environment of higher risk aversion, additional cuts in interest rates in the US create room for a more accommodative monetary policy in countries such as Mexico, Brazil, Chile and Peru.

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