The gradual relaxation of monetary policy by the Federal Reserve (Fed) and an improvement in the indexes of inflation are marking a path of recovery for the economies of Latin America, according to an analysis by the rating agency Fitch Ratings published this Monday.
Fitch indicated that Latin American companies should begin to experience a more favorable environment for its operations, as less tightening in monetary policy will ease pressure on its cash flows.
The agency noted: “The pace of improvement will depend on the degree and speed of rate cuts and inflation control, which should stimulate weak consumer activity in many markets.
Several countries in the region have made a shift in their monetary policy this year by beginning to reduce interest rates, with Brazil, Chile and Uruguay leading this movement. Meanwhile, in the United States, the recent message from the Federal Reserve has increased market speculation that the period of increases in borrowing costs may have come to an end.
Fitch highlighted that economic data in Brazil has exceeded market forecasts this year and which now projects a growth in the country’s GDP of 3.2% by 2023. This is also supported by an increase in the grain harvest in the current season and a resilient labor market.
In addition, Mexico has a solid labor sector and high flows of remittances that support domestic consumption, along with positive foreign investment figures derived from the “nearshoring” phenomenon, according to Fitch.
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