A soft end to 2016

Latin America’s economy has ended 2016 on a relatively downbeat note. The news from Brazil has gone from bad to worse, with both industrial production and retail sales falling in the most recent monthly data. Industrial output in Mexico is stagnating, due in large part to further falls in mining production, while the latest data from Chile and Peru have been a bit softer too. We expect the prospects for the region to improve next year: business investment is close to bottoming, while a drop in inflation means that most central banks will loosen policy. However, the big picture is that the recovery will be both slow-going and fragile. 2017 should be an improvement on 2016, but anyone hoping for a dramatic revival in the region’s fortunes will be disappointed.