Tight fiscal stances, deteriorating terms of trade and weakening labour markets mean that Latin American economies will continue to struggle and we think regional growth will come in below 2% in the coming years; consensus forecasts are for an acceleration. Despite slow growth, inflation will remain above target for some time. This will prompt central banks in Mexico and Peru to hike interest rates. In Colombia and Brazil, monetary easing is still on the cards, but the scale will hinge on the extent of fiscal tightening.
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