The surprising strength this year of the region’s two largest economies, Brazil and Mexico, will fade in 2024 and growth over the next couple of years is likely to come in below consensus expectations. In contrast, the Andean economies are set for a modest recovery. The large falls in inflation are now behind us and it will be a slow grind lower from here given the backdrop of continued rapid wage growth. The result is that central banks will tread more cautiously with interest rate cuts than most expect. Public debt concerns are likely to build. Argentina is heading for yet another default while sovereign debt dynamics elsewhere are likely to deteriorate from next year.
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