Economic Activity Prints Likely to Show Signs of Cooling Growth Across Latin America

  • The monthly economic activity prints in Brazil, Colombia and Peru will be closely monitored over the next week to gauge the pace of the cooling in economic activity in the months ahead, says Fitch. 
  • Throughout 2021, Peru and Colombia have posted strong recoveries from the COVID-19 shock, due to elevated consumption spending, which has driven retail sales and looser public health restrictions which has supported growth of manufacturing and industrial production. These factors contributed to monthly economic activity growth rates of 4.6% and 9.3% in October, for Peru and Colombia, respectively. 
  • However, Peru’s September monthly economic activity grew 9.7%, signaling that the economy has entered a period of cooling for the month of October following strong growth. Brazil has also seen its economic activity decelerate, as elevated inflation and reduced stimulus measures have diminished purchasing power. 
  • In the final economic activity prints of 2021, and into 2022, Fitch expects economic growth to cool across the region. This will be driven by base effects becoming less favourable, supply chain bottlenecks slowing production levels, high inflation and rising interest rates both at home and abroad. Overall, growth is expected to return closer to pre-pandemic trend levels in Latin America and much of the world in 2022.

(Source: Fitch Solutions)