Latam Economic Outlook: Third Quarter 2014

The significant moderation in household and business expectations, as well as the weakness in domestic demand indicators, led us to a downward revision of our growth estimates for first half of 2014, except in Colombia. That said, the slump in the region appears to be behind us, and growth should increase beginning in the third quarter. The acceleration in growth starting in the third quarter of this year should be driven by a rise in world growth and foreign demand, as well as by a recovery in investment. Thus, our forecasts suggest that growth in Latin America would slide from 2.5% in 2013 to 1.6% in 2014, recover to 2.5% in 2015, and gradually converge over the following years toward the region's potential, which we place at slightly above 3%. The momentum in the region will remain very heterogeneous, with the Pacific Alliance countries standing out above the regional average.

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