The current economic recovery of Latin America remains skeptic over increasing huge budget deficits and reducing investor confidence. It seems that the region’s economic recovery from the recession induced by the pandemic is now in question.
The Latin American region, in particular is facing a string of challenges, especially with countries like Brazil, Argentina, Colombia, Peru and Mexico reporting the highest number of coronavirus cases and sharp cumulative death rates.
XP Investimentos analysts in their monthly report said “The expenditure ceiling will continue to be threatened if there is no willingness to alter mandatory expenditures and/or reallocate existing social benefits. Political pressure will continue, both for a new social program and for increased investments…This uncertainty may curb the performance of the Brazilian economy and financial assets in the coming quarters.”
However, the Brazilian economy is projected to grow 3.5 percent next year, while the contraction estimated for this year has improved from -6.4 percent to -5.1 percent, media reports said. In July, the economic outlook for Mexico was upgraded to 3.5 percent from 3 percent, but the median forecast for this year reduced to -9.9 percent from 9 percent. This means that economic recovery is expected to be weak.
Earlier this year, Latin America and the Caribbean should improve their stimulus to stay afloat, according to the United Nations agency. The Economic Commission for Latin America and the Caribbean has urged governments to gain financing to mitigate increased levels of poverty and unemployment.