Persistent imbalances in the drivers of growth

Growth is still unbalanced in many parts of Latin America. The resilience of domestic demand against a weak global backdrop has helped to bolster service sector activity, even as local industry languishes. Nonetheless, in a few countries the limits to such “two-speed” growth have already started to become apparent. Both Brazil and, more recently, Colombia have seen their economies slow sharply, prompting the authorities to loosen monetary and fiscal policy. By contrast, growth has held up rather better of late in Chile and Peru, and in both cases policymakers look set to keep interest rates on hold for at least another couple of months.