Growth to accelerate further in 2018

We expect economic growth in most countries in Latin America to accelerate further in 2018. Of the region’s major economies, we anticipate a pick-up in growth next year in Brazil, Mexico, Colombia, Chile and Peru. Argentina is the only major economy where we expect growth to weaken, and even here the slowdown is likely to be modest. In most countries, the big drop in inflation is now behind us, although we do expect a sharp fall in inflation in Mexico and (to a lesser extent) Colombia in Q1 2018. Most central banks will loosen policy a little further, but the scope for significant additional cuts in interest rates is now limited. Despite a broadly positive outlook for the region’s economy over the next year, a lot of the good news now appears to be priced into financial markets. Equities may grind a little higher from here, but we expect yields on foreign currency bonds to rise over the coming year, and think that most currencies will weaken against the US dollar.