Latin America GDP Roundup: Regional Growth To Slow Somewhat, Despite Upbeat Q1

• Fitch forecasts that Latin America will see another year of slowing economic activity in 2023, with growth set to ease to 1.5%. However, this is an upward revision from the previous forecast of 1.1% due to better-than-expected data for the opening quarter of the year. This will result in the region remaining a laggard in the EM space, with only Emerging market countries in Europe set to perform worse.
• While there will be slower growth overall for the region, Fitch has revised up forecasts in almost all of its major markets on the back of better-than-anticipated outturns in Q123. Among its major markets, Peru will experience the highest rate of growth in the region (2.3%), while Argentina and Chile will fall into a contraction with a revised downward forecast of -2.1% and -0.1% respectively.
• Additionally, data in Latin America’s two largest economies – Mexico (GDP growth forecast revised up from 1.8% to 2.2%) and Brazil (GDP growth forecast revised up from 1.2% to 1.7%) – have continued to come in well above expectations in recent months, with growth in the former supported by strength in domestic demand and in the latter by an unusually strong performance for the agricultural sector. 
• Colombia’s economy is also forecast to grow by 2.0% in 2023, an upward revision from 1.1% previously, on the back of private consumption and export growth.
• Risks to Fitch’s regional growth forecasts are mostly to the downside, particularly in terms of inflation. If inflation proves stickier than anticipated (in Peru, Colombia and Argentina in particular), it will continue to eat away at purchasing power and could result in central banks keeping rates higher, weighing on growth.

(Source: Fitch Solutions)