The latest data from the region have been somewhat softer than expected. Industrial production slowed in both Brazil and Mexico last month, while forward looking indicators weakened too. Data on the household side have also disappointed – Brazilian retail sales fell by 3% m/m in April. But this doesn’t mean that the wheels have fallen off the recovery. For a start, we would not read too much into one month’s figures. More generally, the softer tone of recent data will come as a relief to policymakers in some countries, notably Brazil, where the red-hot pace of the recovery has become a cause for concern. We still expect growth in the region to fade over the next year or so but despite the emergence of new threats to the recovery (notably the sovereign debt crisis in Western Europe) a moderate slowdown remains more likely than a complete collapse. The exception remains Venezuela, where recent currency reforms are the latest attempt to deal with a dollar drought that is increasingly crippling the country’s economy.