By Mark Keller and Santiago Gutiérrez
Slow growth will be Latin America’s “new normal” in 2015. The IMF expects growth this year to reach just 2.2 percent – up from 1.3 percent, but still less than ideal. The deceleration comes amid a decline in the commodity cycle, with the price of traditional Latin American exports such as soy, copper, and especially oil, experiencing large declines amid reduced global demand, especially from China. This reduced demand will spell slower growth in all the region’s economies – and even recession in those countries without strong macroeconomic fundamentals such as Argentina and Venezuela. Additionally, as the United States returns to normal growth rates, the Federal Reserve is likely to return to normal interest rates – which will mean the end of access to easy financing for Latin America.
This slowdown will have consequences for the region’s economies, with reverberations in politics and the business cycle as well. Below, Latin Trade lays out its top 10 things to watch for in 2015.
1. Mexico: A rising star could falter.
The reforms undertaken by the administration of Enrique Peña Nieto since taking office in 2012 have been nothing short of phenomenal, with reforms in the energy, telecommunications, banking, and education sectors, among others. These reforms have generated enough investor excitement to have many dub this the “Mexican Moment,” and should continue to deliver results in 2015. Additionally, the Mexican economy should …
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