Latin America’s GDP growth is likely to slow a little in 2026 and, with inflation softening, monetary easing is likely to continue. The scale of rate cuts will vary across countries, with a large cycle to come in Brazil and limited cuts in Mexico and Chile. But one common theme is that interest rates will probably follow a lower path than implied by market pricing.
Next year is also a busy one for elections. If market-friendly candidates pull ahead in Brazil and Colombia, that will raise hopes that their long-standing fiscal problems will be tackled. The fiscal stakes aren’t as high in Costa Rica, Peru and Chile given better management of their debt positions. Still, fiscal tightening is likely to weigh on demand across the region next year, feeding into our view for weak regional growth.