Latin America has turned a corner, but recovery is uneven

Growth in Latin America appears to have picked up in recent months. Our proprietary GDP Tracker suggests that the region’s economy expanded by about 1.5% y/y in the fourth quarter of last year, having grown by less than 1% y/y in both the second and third quarters. But while the pick-up is encouraging, the recovery has been uneven. Economic growth accelerated in both Mexico and Chile in the fourth quarter, and there are signs that the slowdown in Peru has bottomed out too. We anticipate steady, if unspectacular, growth in these countries over the coming months. In contrast, Brazil’s economy appears to have stagnated in the final quarter of last year, and government belt-tightening will constrain growth further over the coming months. Meanwhile, the economic situation in Venezuela has gone from bad to worse. Despite the government’s recent reform (and devaluation) of the bolivar exchange rate, the economy appears to be sinking further into crisis.