Slowdown in LatAm is coming to an end - BBVA

According to the Research Department at BBVA, conditions seem to be improving in most of Latin American countries and the slowdown in economic growth will end in 2016. They project growth of around 1.8% in 2017.  

Key Quotes: 

“After a difficult start to the year, external and domestic conditions seem to be improving in the majority of Latin American countries.”

“Fewer doubts about China favoured greater calm in the markets, which managed to absorb Brexit and the resulting increase in global risk aversion without any problems, no doubt thanks to the reaction of the developed economies’ central banks, in the case of the Fed by making the rate hike slope even more gradual.”

“Some recovery in growth can be discerned, especially towards the second part of this year. 2016 will still be a year of adjustment, with a fall in activity of 0.9%, making five years of slowdown and three of growth below that of OECD countries, something that had not been seen since the beginning of this century. Even so, the second half of this year should bring greater dynamism, and the region’s slowdown should touch bottom this year.”

“There will of course be great disparities in the region, with the Pacific Alliance countries (Mexico, Colombia, Peru and Chile) sustaining an average growth of around 2.7% in 2016-17, as against the recession in Brazil and Argentina this year. 

“In 2017, the countries that will grow most in Latin America will be Peru, Argentina, Colombia and Paraguay. News on inflation has been positive in the majority of countries. Although inflation is still above the central banks’ targets (except for Mexico, Paraguay and, recently, Peru), it has been falling in the past few months, thanks to reduced pressure from exchange rates. The exceptions have been Colombia, Argentina and Uruguay, although in the first two it should start to come down in the next few months.”