According to Citi's macroeconomic projections, the only countries that will accelerate their growth this year are Colombia, Chile and Peru.
In 2024, Latin America's economy, like those of the rest of the world's regions, will slow to 1.4% before rebounding in 2025 to growth rates slightly above 2%, said Ernesto Revilla, chief economist at Citi for Latin America , during the macroeconomic projections event for the first quarter of this year.
“Despite high interest rates in the United States and the slowdown in China, [Latin America] has performed well, and this is due in large part to the fact that commodity raw material prices have maintained at a level that supports the economies of the countries in the region,” he explained.
Revilla identifies that in 2024 the countries that are going to slow down are those that grew the most in 2023, that is, Panama (7%), Costa Rica (5.1%), Brazil (2.9%), Ecuador (2, 4%) and Mexico (3.2%), because they are going to “moderate their growth.” While Colombia (0.3%), Chile (0.2%), and Peru (-0.55%), those that grew less that same year, are going to “accelerate.” This is because they are adopting political and economic measures that favor an environment conducive to growth, such as gradual cuts in interest rates.
“There are some common elements in the Andean region [inflation and political noise], but there are also asterisks in different countries,” said Esteban Tamayo, Citi's chief economist for Colombia, Peru, Central America and the Caribbean .
For its part, Peru has stood out for its economic recovery process, projecting a growth of 2.4% for the year 2024, according to data from the Central Reserve Bank of Peru (BCRP). This boost is largely attributed to the copper sector, whose favorable prospects have generated optimism in international markets. However, Tamayo explains, internal political uncertainty, especially around debates on presidential vacancy and constitutional reforms, has raised doubts about long-term stability.
In Colombia, monetary policy decisions have been in the spotlight, with gradual cuts in interest rates seeking to stimulate economic activity and control inflation. The Bank of the Republic of Colombia (Banrep) has reduced rates by 25 basis points, taking them to 8.5% with prospects of reaching 8% by the end of the year. However, caution remains among central bank members, who face both internal and external pressures, including the volatility of oil prices and expectations from the US Federal Reserve.
Added to this are discussions about labor and health reforms, as they have generated controversy and polarization in the national political sphere, adds Tamayo.
Meanwhile, the economist continues, Mexico faces similar economic challenges, with a focus on price stability and sustainable growth. The Bank of Mexico (Banxico) has adopted a stance of gradual cuts in interest rates, reducing them to 5.5% with expectations of reaching 5% by the end of the year. Persistent inflationary pressures and domestic political uncertainty pose obstacles on the path to recovery.
“The global economy and the regional economy are still behaving in an abnormal way compared to previous economic cycles [pre-pandemic], so they could still give us both more positive and negative surprises,” warns Ernesto Revilla.
