Growth in the region appears to have weakened sharply in Q3 and, if anything, the risks to our below-consensus forecasts may now lie to the downside. High inflation across the region limits the extent to which central banks can provide support.
The first round of Brazil’s presidential election points to a further shift in the region’s politics towards the right. That promises more orthodox macro policy. But fiscal tightening to rein in budget deficits (in Brazil and elsewhere) will continue to weigh on demand.
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