Growth to stay weak as commodity boom ends

The world economy is recovering, but we expect growth in Latin America to continue to trudge along at a rate of 2.5-3.0% over the coming years. Sluggish growth will be due in part to less supportive external conditions as Chinese demand for commodities weakens and global monetary conditions tighten. With local credit growth also set to slow, the boom in domestic demand that has driven growth in Latin America over the past decade looks set to fizzle out. At a country level, the outlook for Argentina and Venezuela remains by far the worst in the region, with both economies now on the cusp of balance of payments crises. Elsewhere, while most other countries should avoid a “hard landing”, growth looks set to remain weak for some time. The one bright spot is Mexico. After a dismal 2013, we expect growth to accelerate this year as the US economy gathers steam.