Latin American countries, except Argentina, expected to avoid recession, says Barclays
According to British investment bank Barclays, most Latin American countries are unlikely to experience a recession in 2023, except for Argentina.
The bank attributes this resilience to solid institutions and regional fiscal consolidation.
In its global forecast revision, Barclays stated that despite the U.S. Federal Reserve’s aggressive monetary tightening and the potential risks of a recession and financial market crisis, Latin America has shown resilience and even experienced prosperity.
Except for Argentina, the bank notes that most countries are far from entering a recession.
It suggests that Latin American central banks may even have the capacity to ease monetary policy before the U.S. Federal Reserve does.
Barclays has raised its economic growth forecast for Brazil to 2.1 percent from 1.5 percent, citing the country’s robust labor market due to increased agricultural production and a fiscal transition package allowing for higher public spending.
For Mexico, the bank has upgraded its growth forecast to 2.5 percent from 2.0 percent, attributing the improvement to business relocation and the boost it has provided to the construction industry.
The trend of “nearshoring,” where companies establish production lines from Southeast Asia and Eastern Europe, has contributed to Mexico’s economic performance.
Barclays also highlighted that its revised forecast for Mexico is based on the expectation that the U.S. economy will not slow down as previously anticipated.
However, Colombia, Peru, and Chile have experienced slower growth due to tighter monetary policies, fiscal consolidation efforts, and political challenges.
Barclays predicts that certain Latin American central banks will begin easing monetary policy before the U.S. Federal Reserve.
It anticipates the first interest rate cut in Chile in July, followed by Brazil and Colombia in September, Peru in October, and Mexico in February 2024.
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This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief