Recovery falters

The recovery that was seemingly underway in most parts of Latin America towards the end of last year appears to have faltered in recent months. Indeed, our proprietary GDP Tracker suggests that the region grew by just 0.5% y/y in the first quarter, down from 1.0% y/y in Q4 and back to the lows seen in mid-2014. The latest downturn has been led by Brazil, where a combination of fiscal and monetary tightening appears to have caused output to contract once again in Q1. But Mexico is also struggling as a result of steep falls in mining output, and lower oil prices are also taking their toll on Colombia’s economy. As it happens, we expect growth to pick up once again over the second half of this year. But the slowdown in the first few months of this year are a reminder that the recovery is likely to remain stop-start – and that even in the upswings, growth is unlikely to impress.