Latin America narrowly avoids contraction in the last quarter of 2021: Oxford Economics

Bloomberg — According to Oxford Economics, Latin America managed to escape economic contraction late last year, with Chile and Colombia leading growth.

The region is forecast to have grown 0.2% in the fourth quarter, as positive results from smaller economies more than offset Brazil’s recession and Mexico’s near stagnation, the research firm said in a report on Friday.

“Strong growth in Chile and Colombia should prevent a regional contraction,” economists Joan Domene and Felipe Camargo wrote in the report.

Latin American economies are running out of steam as most governments withdraw fiscal stimulus and central banks raise interest rates to fight above-target inflation. These headwinds are shortening the region’s recovery from the Covid-19 pandemic, even as businesses reopen thanks to advances in vaccination campaigns.

However, the growth mismatch between the region’s largest and smallest economies was not reflected in the performance of its forex market late last year, according to Oxford Economics, which noted that all currencies experienced widespread weakness. .

“The increasingly aggressive tone of the United States Federal Reserve since the beginning of the year and the market’s assessment of an aggressive normalization cycle in that country could trigger new episodes of financial volatility in the region”he warned.

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This article was translated by Estefanía Salinas Concha.

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