Latin America Economic Outlook. Third quarter 2019

Latin America: growth will be of only 1.0% in 2019 and will recover to 2.2% in 2020

Key points

• Key points:
• Persistent trade tensions and the slowdown in world growth will negatively impact economic activity in Latin America. However, a new round of policy stimulus, in particular by the Fed and the ECB, may create some room for maneuver to the region.
• Latin America will grow only 1.0% in 2019, significantly less than previously expected (1.7%). The generalized downward surprise in growth in the first half of the year is behind this revision.
• In 2020 growth will reach 2.2%, slightly below the previous forecast (2.3%), favored by greater dynamism from the second half of 2019 onwards. The acceleration of growth will be supported by further policy stimulus, mainly monetary, thanks to the U-turn by the Fed and a context where inflation is, in general, under control.
• The balance of risks is tilted to the downside: both global factors (trade tensions, risk aversion) and local issues (political noise, fiscal policy) could further delay the process of convergence to potential of growth in the countries of the region.

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