Q4 GDP figures out this week showed that Colombia’s surprisingly strong recovery has been fuelled by rapid consumer spending growth, but this is unlikely to last as the boost from the re-opening fades and policy tightening kicks in. Meanwhile, in Brazil, growing evidence that Lula – the front-runner in the race for the presidency – would govern as a moderate has reduced fiscal risks and supported a strong rally in the real. While we think the currency will give up some of its recent gains, the risk that it will fall to our relatively downbeat end-year forecast is diminishing.
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