Although there is mounting evidence that some economies in the region – notably Brazil – have returned to positive growth, others remain mired in recession. Mexico and Chile contracted once again in Q2, albeit at a slower pace than in Q1. While the region should pull out of recession over the second half of the year, the pace of recovery looks set to disappoint. Renewed falls in commodity prices remain a major threat and new risks are emerging - most notably a sharp deterioration in fiscal positions.