Strains in the global banking sector have flared up at a time when Latin America was in the midst of a period of economic weakness. Regional GDP fell in the final quarter of last year and surveys for early 2023 have been soft. Latin America’s banks have so far remained out of the storm and the situation. But the impact of the recent turbulence on commodity prices could dampen the prospects for domestic demand in the region further. And to the extent that domestic credit conditions tighten as a result, that will compound the effects of aggressive monetary tightening cycles over the past couple of years.
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