Economic growth in Latin America slowed further in the first half of 2014 and we see little chance of a strong rebound over the coming quarters. The key props to strong growth in the past decade are crumbling. Rapid credit growth will have to cool, while the global commodities boom has ended. With policymakers shying away from the structural reforms that are needed to raise productivity and reinvigorate growth, the region will be left treading water for the foreseeable future. We have pencilled in average regional GDP growth of just 2.3% in 2014-16. Given that at least part of the slowdown is due to structural factors, weaker growth looks set to become entrenched meaning that interest rates will remain relatively low for a very long time.
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