Lower Growth Projected for LATAM in 2024

• Fitch Solutions expects that real GDP growth in Latin America (LATAM) will cool from 2.2% in 2023 to 1.8% in 2024. LATAM’s growth will trail well behind the global emerging market average of 3.8% in 2024.
• The growth slowdown in 2024 will largely be driven by Brazil (2.9% in 2023 to 2.1% in 2024) and Mexico (3.1% to 2.5%), the two largest markets in the region, due to moderating exports and the lagged impact of elevated interest rates.
• By contrast, Chile (0.2% to 1.8%), Colombia (0.6% to 1.3%) and Peru (-0.6% to 1.9%) will see growth rebounds.
• Fitch also expects that regional central banks will continue to cut interest rates throughout 2024, after being the first in the world to begin easing in 2023, albeit constrained by the timing of rate cuts in the US.
• That said, there are risks to the outlook. Fiscal deficits will remain high in several markets, amplifying FITCH’s concerns about policy direction. With leftist leaders in power and as general frustration with the status quo grows, it could lead to swings from right to left given that voters will go to the polls in several countries this year in what is being dubbed a “super election cycle” globally.
• Additionally, poor productivity, high levels of corruption and elevated public debt will all be limiting factors, despite Latin America’s commodity riches and growing labour force driving growth.

(Source: Fitch Solutions, NCBCM Research)