Recovery set to be slow-going

Following last year’s sharp downturn, economic growth in Latin America should improve this year and next. But the pace of the recovery will be slow-going and GDP growth will remain far weaker than during the past decade. We are forecasting GDP growth of just 1.5% in 2015 – up from 1.0% last year, but well below the average of 4.0% over 2004-13. We remain upbeat on the prospects for Mexico, even though tighter fiscal policy will limit its economic recovery. A modest pick-up is on the cards in Chile and Peru too as prices of their industrial metals exports stabilise and monetary and fiscal policy remain accommodative. However, a combination of high inflation, tighter fiscal and monetary policy look set to leave Brazil lagging behind.