Cyclical recovery to gather momentum

We expect growth in most countries in Latin America to accelerate over the course of this year as the region’s cyclical recovery gathers pace. Inflation is now bottoming out and in most places it will drift higher over the coming quarters. As a result, monetary policy easing cycles are now at or very close to an end in most countries and the next big move in interest rates will be up – although we don’t expect any central bank to shift into tightening mode in the next 6-9 months. Political risks are growing but are unlikely to disrupt near-term growth momentum in the region. Instead, to the extent that elections this year do deliver a populist shift, the risks to growth are likely to crystalise over a 2-3 year horizon. All told, having expanded by 2.0% last year, we expect regional GDP to grow by 3.0% in 2018 and 2.7% in 2019.