GDP in Latin America and the Caribbean is set to grow 2.1% this year, three-tenths of a percentage point more than projected in July, the International Monetary Fund said on Tuesday, after revising growth forecasts for the region's two largest economies.
While the IMF significantly raised its 2024 growth forecast for Brazil to 3.0%, up from 2.1% in July, it noted in its updated World Economic Outlook that Mexico's economy is expected to expand 1.5%, seven-tenths of a percentage point less than previously estimated.
The contrasting momentum of the two countries have led to different inflation scenarios, with Brazil, the region's largest economy, expected to keep tightening monetary policy to curb rising prices, while Mexico moves towards lowering rates.
The IMF attributed Brazil's improved outlook to stronger private consumption and investment in the first half of the year, fueled by a tight labor market, government transfers, and a less-than-expected disruption from floods earlier this year.
As for Mexico, the IMF said the revised figure reflects weakening domestic demand.
Among the region's major economies, Argentina is the only one projected to contract this year, with a 3.5% decline, more than double its 1.6% drop in 2023. However, the IMF expects a strong rebound in 2025, with 5.0% growth.
Overall, economic activity in Latin America and the Caribbean is expected to remain broadly stable this year compared to the 2.2% growth seen in 2023, with the IMF forecasting an acceleration to 2.5% in 2025.
