The level of activity and inflation at the center of the new global scenario

After a series of recessionary events, the global economy continues to recover while inflation continues its downward path. The region, with some exceptions, mirrors these trends, as well as Uruguay, where domestic specificities also come into play.

Key points

• Key points:
• Global growth will decrease from 3.4% in 2022 to 3.0% in both 2023 and 2024 given the sustaining of restrictive monetary policies and less expansionary fiscal policies.
• Globally, inflation will continue to fall, maintaining its gradual convergence toward targets, but rate-cutting cycles are not expected to begin before mid-2024: the Fed and ECB are expected to start cutting rates in Jun/24 and Sep/24, respectively, although liquidity levels will continue to fall.
• In the region, economic activity will grow 1.4% in 2024, below 2023 (2.0%) and the 2007-2019 average (2.2%). This result hides large differences between the region's main economies.
• Latam is overcoming the acceleration of inflation thanks to the early actions of governments and Central Banks, which have contained the deterioration of activity, the rise of inflation and inflationary expectations. The performance of the BCU was key to this outcome.
• The particular situation that Argentina is going through will have an impact on Uruguay, but not comparable to previous crises. The tourism sector will perhaps be the most affected by the strong devaluation of the Argentine peso.

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