The gradual relaxation of monetary policy and an improvement in inflation rates should help Latin American economies to reactivate, by stimulating weak demand and greater dynamism in the markets, the rating agency Fitch Ratings said on Monday. .
In an analysis, Fitch further said that Latin American companies should begin to notice a more benign environment for their operations, as the less strict monetary environment will ease pressure on their cash flows.
“The pace of improvement will be relative to the degree and pace of rate cuts and inflation control, which should stimulate weak consumer activity in many markets,” the agency said in a note.
Several countries in the region took a turn in monetary policy this year to begin cutting rates, with Brazil, Chile and Uruguay leading the way, while in the United States the most recent message from the Federal Reserve increased speculation in the investment market. that the stage of rising borrowing costs could have ended.
Fitch highlighted that economic data in Brazil has exceeded market forecasts this year and that it now estimates that the country’s GDP will grow by 3.2% in 2023, also supported by an increase in grain harvests in the current season and a resilient labor market.
Likewise, Mexico has a solid labor sector and high remittances that support domestic consumption, which adds to the positive foreign investment figures derived from the “nearshoring” phenomenon, Fitch indicated.