Outlook for Latin American Economies Worsens Ahead of Election Season Anu Bararia - Reuters
go to original September 21, 2017

Economic growth in Latin America will be slower than previously thought this year across nearly every major regional economy as political uncertainty simmers ahead of a series of scheduled elections, a Reuters poll showed.

Economists at leading banks and research firms cut 2017 growth estimates for six of the seven largest economies in the region from an April poll against a backdrop of slowing inflation there and elsewhere in the world.

“We expect a gradual recovery in the second half and into 2018,” said Andres Abadia, senior economist at Pantheon Economics. “But increasing political uncertainty, and the looming end of favorable base effects in the inflation rates in some economies will limit policymakers’ scope for action.”

Brazil, the region’s largest economy, is forecast to expand just 0.5 percent this year and 2.1 percent in 2018, according to median estimates, both down from 0.6 percent and 2.4 percent in the April Reuters poll.

Chile and Colombia are set to grow 1.6 percent and 1.8 percent this year, down from 1.9 percent and 2.3 percent, respectively, in last quarter’s poll.

In Argentina and Peru, GDP is set to grow 2.5 percent and 2.7 percent, respectively, compared with previous estimates for an expansion of 2.8 percent and 3.5 percent.

The one main exception was Mexico, where a blow forecast in the months after Donald Trump’s surprise election in the U.S. based on worries his administration would erect trade barriers and a border wall did not take place.

“Mexico’s businesses seem to have realized that they may have reacted prematurely to possible changes in U.S. policies,” said Alexis Milo, Mexico chief economist at HSBC.

Economists upgraded their view on Mexico to 1.9 percent growth this year, from 1.7 percent previously.

Read the rest at Reuters

Related: 4 Lessons U.S. Entrepreneurs Can Learn from Latin American Startup Culture (Entrepreneur)

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