Latin America Key Themes 2021, Mid-Year Review

• Fitch Solutions forecasts headline real GDP growth figures to slow across Latin America in 2022. However, the lower headline figures will be due in large part to the fading impact of base effects and do not imply significant economic weakness for the region. 
• Instead, real GDP growth will continue at a more moderate pace as greater vaccine availability across the region allows for loosened public health restrictions. 
• The agency forecasts that nearly every country in Latin America will be able to vaccinate their priority populations, which it defines as those 65 and older, healthcare workers and those with underlying health conditions, by late-2022.  
• This will allow governments to ease restrictions on mobility and commercial activity, providing a bump to private consumption. Similarly, the agency expects strong global economic activity will support demand for the region’s exports. 
• Overall, Latin America’s economy is expected to return to its pre-pandemic size in late-2022. Considering this, the agency expects Latin America to continue to lag every other emerging market region, reflecting its view that years of weak investment, unfavourable demographics and political volatility will weigh on growth.  
• Moreover, there are downside risks to growth stemming from political uncertainty in 2022. Brazil and Colombia will hold presidential elections in 2022, and uncertainty could weigh on investment, dragging down growth, should those campaigns suggest the possibility of drastic changes in policy direction. 

(Source: Fitch Solutions)