Fresh headwinds appear

The easing of Omicron waves, and loosening of restrictions, across Latin America will have given a lift to recoveries in recent weeks, but the fallout from the Russia-Ukraine crisis presents a fresh headwind to the region. While the recent surge in global commodity prices will benefit some Latin American countries, not all will see an improvement in their terms of trade. And higher prices will add to strong inflationary pressures, squeezing real incomes and consumer spending. Central banks will maintain their hawkish stance, and additional rate hikes will be a further drag on activity. The upshot is that the regional recovery will remain sluggish in the coming months.