In a year of global uncertainty, both by economic and geopolitical factors, Latin America has shown a particular resilience that has manifested itself in the appreciation of its currencies and the reduction of its risk premiums. The region has gradually advanced towards its macroeconomic balances, although several countries still have pending accounts in this front. The dynamism of Argentina is highlighted, together with Colombia, the only ones between the main economies that show an activity in activity compared to 2024. On the contrary, other large ones such as Mexico and Brazil, present slowdowlockers, but lower than those estimated three months ago. Although the aggregate growth of the region will be better in 2025 (2.2%) than in 2024 (1.8%), this will not be homogeneous, however it is located slightly above its average of the last 15 years. By 2026 an activity moderation is expected again, around 1.8% growth, product of the slowdown in the impulse of Argentina and a greater deceleration of Brazil that are not compensated by the shy recovery of Mexico and the advance of Colombia. Inflation continues high this year, still in the upper part or slightly above the goals of most countries, with the exception of Peru that has it slightly under Peru. The process of convergence in inflation has been slower than anticipated in several geographies, with some conjunctural rebounds in previous months. It is anticipated that by 2026 most economies in the region reach their objectives, with the exception of Colombia, which continues with persistent inflation, and Argentina, which is still in an economic adjustment process.In this context, monetary policy presents heterogeneous faces. On the one hand, a group of countries that have achieved greater progress in containment of inflation and that today maintains low interest rates in relation to those of the United States, such as Chile and Peru. But on the other, Colombia or Brazil retain high types. It is important to highlight that, despite the fact that several economies in the region face fiscal challenges, these two have shown the greatest fiscal deterioration, one of the reasons for a more conservative monetary policy position. By 2026, type reductions are expected to continue and gradually reach the terminal type of the current cycle in much of the economies. Now, most likely greater than that observed in recent history. At the end, Latin America gradually transits towards its macroeconomic balances. However, there is a question of whether to reach those balances, with a lower growth than the world average, it is enough to close the social gaps that still exist in the continent. Alejandro Reyes González, BBVA Research.
