LATAM: Growth recovers, but it is still low - BBVA

According to the Research Department at BBVA,  economic activity started to recover in Latin American. They see that financial markets continued to show gains for Latam assets in an environment of unusually low volatility, which could be abruptly reversed

Key Quotes: 

“Global growth continues increasing and becomes more widespread. Financial markets still favor emerging economies. Global risks still remain alive.”

“Growth recovers in Latin America, but will still be low in 2017-18. Growth is revised up 0.3pp in 2017 to 1.1% and remains unchanged at 1.6% in 2018. Growth in 2018 will be driven by the external sector and infrastructure investment in Argentina, Colombia and Peru.”

“Inflation continues falling in South America and starts to do so in Mexico, driven by stable exchange rates, weak demand and, in some countries, lower food prices. Consequently, central banks will cut interest rates in South America in coming months and at end-2018 in Mexico

“External risks for Latam decrease somewhat, apart from the possible overvaluation in financial markets. On the internal front, political noise and uncertainty also moderate, but remain high.”