There has been a fairly significant improvement in the external accounts of Latin America’s major economies since 2019, which has helped to reduce what is a perennial threat to macro stability in the region. Current account balances in the ‘Big Six’ (i.e., Argentina, Brazil, Chile, Colombia, Mexico, and Peru) have improved by an average of 1.3% of GDP over this period, aided by a 0.9 percentage point (pp) narrowing of the goods trade deficit.
The tailwind provided by higher commodity prices helped to lift exports (particularly in Brazil, Chile and Peru), while Mexico was the chief direct beneficiary of robust United States (U.S.) domestic demand. These dynamics worked to offset generally solid growth in imports linked to strength in private consumption, which has been driven largely by increased social transfers that have seen fiscal deficits widen throughout the region with the notable exception of Argentina.
Trends in the region’s balance of payments data look even more positive when considering shifts in the financial account. The core balance, which comprises the current account balance and net FDI inflows, is firmly in surplus for each of the six major economies in the region. This reflects the imposition of government controls on some international transactions in Argentina’s case, but in general terms, the uptick in investor interest in commodities in response to the price action and the allure of ‘nearshoring’ has seen foreign direct investments (FDI) inflows hold up relatively well. Of note, the share of global FDI flowing to Latin America has crept up from 9.1% in 2019 to 14.5% as of 2023 (latest data available).
These positive developments have, in turn, paved the way for a modest reduction in the external debt ratios, contrasting somewhat with trends seen in other emerging markets and the region’s own experience during the last commodity bull run (roughly 2000-2014). Additionally, narrowing current account deficits have also been used to build back up FX reserves, after they were spent down during the first half of 2020 as concerns over dollar shortages prompted a ‘dash for cash’.
Looking ahead, Fitch expects that some of the post-pandemic improvement in the region’s external positions will reverse, as a more challenging global macro backdrop linked to shifts in U.S. trade policy works to cap commodity prices relative to recent levels.
That said, the current account deficit for the Big Six will remain significantly narrower than the 2010-2019 average of 2.7% of GDP, at about 1.5% over 2025-2026. However, anticipated fiscal consolidation across the region over the coming years will help to prevent a more pronounced deterioration. High copper prices in Chile and Peru, as well as a booming agricultural sector and increased domestic energy production in both Argentina and Brazil, should act as further supports.
(Source: Fitch Connect)
New orders for key U.S.-manufactured capital goods plunged by the most in six months in April amid mounting uncertainty over the economy due to tariffs, suggesting business spending on equipment weakened at the start of the second quarter.
The report from the Commerce Department on Tuesday, May 27, 2025, also showed shipments of these goods falling last month. Economists said President Donald Trump's flip-flopping on import duties was making it difficult for businesses to plan ahead. That has been evident in the deterioration in sentiment among businesses.
Non-defense capital goods orders, excluding aircraft, a closely watched proxy for business spending plans, tumbled 1.3% last month. That was the largest drop since last October and followed an upwardly revised 0.3% gain in March, the Commerce Department's Census Bureau said. Economists polled by Reuters had forecast these so-called core capital goods orders dipping 0.1% after a previously reported 0.2% drop in March.
However, front-running by businesses anxious to avoid the higher prices resulting from Trump's extensive tariffs on imports led to a significant increase in spending on equipment, particularly information processing equipment. This surge occurred at the fastest rate in four and a half years during the first quarter. That helped to limit the drag on gross domestic product from a flood of imports.
Trump has delayed higher import duties on most countries until July. The White House this month announced a deal with Beijing to slash tariffs on Chinese goods to 30% from 145% for 90 days.
The truce in the trade war between Washington and Beijing helped to lift consumer confidence in May to 12.3 points from 98.0 points after deteriorating for five straight months. Consumers, however, continued to worry about tariffs raising prices and hurting the economy.
(Source: Reuters)
Minister of Tourism, Hon. Edmund Bartlett, says the Tourism Entertainment Academy (TEA) will not only redefine the island’s tourism landscape, but is also a transformative initiative aimed at harnessing the vibrant power of Jamaican entertainment.
Speaking at the Academy’s launch at the Artisan Village in Falmouth, Trelawny, the Minister emphasised the vital role of entertainment as a significant value-added component of tourism.
He said that the TEA, which represents a $50Mn investment in Jamaica’s cultural tourism future, is spearheaded by the Tourism Enhancement Fund (TEF), in collaboration with the Ministry of Culture, Gender, Entertainment and Sport, and various key stakeholders. The initiative is a strategic intervention designed to professionalise the local entertainment industry while enhancing cultural experiences for both visitors and residents.
Mr. Bartlett outlined four clear goals for the Academy: to professionalise and certify entertainment practitioners, deliver high-quality performers; generate a strong return on investment, and develop a national blueprint for entertainment within the tourism ecosystem.
“The vision here extends beyond immediate training and certification. We are envisioning a future where Jamaica’s entertainment sector is fully capitalised, positioning the island as a leader in cultural tourism. If we can get this right, we will be way ahead of the game,” he asserted, underscoring the importance of this initiative in maintaining Jamaica’s competitive edge among regional rivals.
(Source: JIS)
U.S. consumers have been curbing their spending in response to high prices and a worsening economic outlook, according to consumer finance company Synchrony Financial (SYF.N). Americans have been accumulating more debt amid strain in their finances, with delinquencies edging up for auto loans, credit cards and home credit lines, the Federal Reserve said last month.
Philadelphia Federal Reserve President Patrick Harker has also warned that trouble may be brewing for the U.S. economy, which is showing signs of stress in the consumer sector, with consumer confidence also waning.
The belt-tightening indicates that Americans, whose finances are broadly healthy, have been stretching their finances amid persistent inflation, said Max Axler, chief credit officer of Synchrony. Most clients are keeping up their loan repayments, he added. "Purchase volumes have gone down across the industry as consumers across all income groups become more thoughtful about spending," Axler told Reuters.
U.S. consumer sentiment plunged to a nearly 2-1/2-year low in March as inflation expectations soared. Some economists have warned that President Donald Trump's sweeping tariffs could boost prices and undercut growth. Concerns about higher prices have driven consumers' long-term inflation expectations to levels last seen in early 1993.
Retailers, including Target and Walmart, have said that shoppers are being careful with their spending, waiting for deals or making tradeoffs to lower-priced items. Household spending cuts could be a precursor to increasing late credit payments or loan defaults, analysts said. While default rates have remained broadly steady, spending is being watched carefully as an early indicator of deteriorating consumer finances.
Borrowers could also become more cautious, taking out fewer or smaller loans and crimping a key source of revenue for banks. Across the industry, loan growth slowed by 5% to 12% in February versus a year earlier, HSBC analyst Saul Martinez said. "There is clearly a slowdown, and it shows that the consumer is vulnerable," Martinez said. "And for banks, slowing loan growth could result in lower net interest income and revenue," he added.
