Cyclical recovery set to resume

The recovery in Latin America stalled in Q2, but we expect regional growth to accelerate over the coming quarters and our GDP forecasts for 2018-19 are generally above consensus. The main exception is Argentina, where we remain more bearish than most analysts, and expect a recession this year. Central banks are likely to shift into tightening mode in the next 6-9 months, although policymakers in Mexico are set to buck the regional trend and cut interest rates. All told, having expanded by 2.0% last year, we expect regional GDP to grow by 2.5% in 2018 and 3.0% in 2019.