The International Monetary Fund (IMF) has revised its economic forecast for Latin America and the Caribbean, projecting the region’s economy to grow by 2.1% this year, a slight improvement from its July estimate. The upgraded outlook, driven primarily by the economic performance of Brazil, contrasts with a downgrade for Mexico, highlighting the divergent trajectories of the region’s two largest economies.
Brazil, which has seen strong private consumption and robust investment throughout 2024, is now expected to grow by 3.0%. This is a significant upward revision from the 2.1% growth projected earlier in July. The IMF credits Brazil’s brighter outlook to several key factors, including a tight labour market, increased government transfers, and resilience in the face of earlier weather-related disruptions.
Meanwhile, Mexico’s economy faces a less optimistic forecast. The IMF now predicts the Mexican economy will expand by just 1.5% in 2024, down by 0.7 percentage points from previous estimates. Weakening domestic demand is cited as the main reason for this revision, which presents a stark contrast to the positive momentum in Brazil.
The differing fortunes of Brazil and Mexico have also led to contrasting inflationary trends. Brazil, with its stronger growth, is expected to maintain a tight monetary policy to keep inflation under control. In contrast, Mexico could begin to ease interest rates as its economy cools.
Argentina, another major economy in the region, is forecast to shrink by 3.5% this year, according to the IMF. This marks a deeper contraction compared to its 1.6% decline in 2023. However, the IMF remains optimistic about Argentina’s longer-term prospects, predicting a substantial rebound with 5.0% growth by 2025.
Across Latin America and the Caribbean as a whole, economic stability seems to be the dominant trend. The region’s GDP growth is expected to remain close to the 2.2% recorded in 2023. Looking ahead, the IMF forecasts a modest acceleration to 2.5% by 2025, as economies across the region find their footing after a year of mixed performance.
This updated forecast, as reported by Reuters, underscores both the resilience and the ongoing challenges faced by economies in Latin America and the Caribbean as they navigate global economic uncertainties.
