This time was different: Latin America’s post-pandemic paso doble with inflation and the exchange rate. Reactive monetary policies, supportive commodity prices and increased investor confidence have helped keep inflation and exchange rate volatility relatively in check. The region has  become more resilient, thanks to lessons learned from previous crises, including reducing its reliance on foreign currency financing, improving financial regulation and supervision and maintaining the independence of central banks. For 2024, we expect a gradual economic recovery, with growth converging to around +2%, as central banks will proceed more cautiously and take a more gradual approach to further rate cuts, followed by +2.2% in 2025. Brazil’s economic growth is set to slow down to +1.7% due to a less promising harvest and lower commodity prices, while in Mexico, recovering agricultural production and more modest growth in industrial production will temper economic growth to +2.0%. Nevertheless, most of Latin America will reap the benefits of the commitment to stabilizing inflation, avoiding the usual hard landing.Insolvency risk remains proportionally higher in Latin America, according to our sector risk ratings whichmight undermine confidence in the region’s businesses and penalize them among foreign suppliers, increasing working capital requirements of Latin American companies. Allowing 30 extra days of payment on imports would free up around USD120bn in working capital, equivalent to the 2023 GDP of Ecuador, Latin America’s seventhlargest economy, or 2% of the region’s GDP.

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