Signs of a turning tide in Latin America

Latin America is in the throes of a prolonged fall from grace. After growth rates averaging above 5% for the first decade of the new millennium, a maelstrom of falling commodity prices and a slowdown in demand from China means forecasters are predicting neutral or negative growth through 2015.

But the winds of political change are blowing. In Argentina, burdened with high government debt and an overvalued currency, an October election could indicate a new start since all potential candidates are seen as more market-friendly than current president Cristina Fernandez. In Venezuela, likewise, a mid-term election in September could be a bellwether of popular discontent over Nicolás Maduro’s presidency, especially given inflation above 60% and an economy forecast to shrink 7% this year.1 Midterms in Mexico in July and in Colombia in October could herald similar clues as to the future direction of these important regional economies.

Colm McDonagh – Insight. a BNY Mellon company

1 IMF forecasts, April 2015

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