Fitch Ratings’ latest forecast of growth in Latin America has been released as we move into the fourth quarter 2024. The focus is on the outlook for the economy post-US election.
Colombia and Brazil are the two countries that stand out as having the best prospects of regional growth in 2025.
Other countries are facing distinct challenges, while both nations can benefit from sectors such as digital infrastructure and tourism.
The region is a mix of opportunity and risk. From the booming Brazil datacenter sector to Ecuador’s political instability ahead of elections, it offers a variety of dynamic opportunities.
Brazil’s datacenter market is booming
Brazil has made significant progress in digital infrastructure, and will attract over $4 billion of investments by September 2024 in order to boost its data centers capabilities.
The influx of new capital will increase dramatically the capacity of the data centers in the United States, and projections are that the number could exceed 415 Megawatts (MW).
This growth can be attributed to the demand for digital services from US companies looking to expand in Latin America.
Brazil is a regional hub for digital growth thanks to its favorable regulatory climate and increasing focus on digital technologies.
Brazil is expected to play a greater role as the demand for digital services and cloud computing increases.
Colombia: tourism boom
Colombia will see a significant increase in tourists in 2024 as well as 2025. This is largely because of aggressive marketing campaigns that target key markets across North America and Latin America.
The marketing campaigns have been designed to draw a wide range of tourists to Colombia by highlighting the cultural and natural wonders.
To accommodate the growth, Colombian authorities are also upgrading their tourism infrastructure.
The country’s economy is heavily dependent on tourism-related revenues.
Diversifying the source markets of the tourism industry is a way to ensure its resilience in future years.
Chile’s banking sector slow to recover
The financial sector in Chile is slowly recovering, especially lending.
Credit Suisse revised their earlier projections down, and now expects year-on-year growth in lending to reach 5.8% by 2024. This is lower than the previous forecast of 7.0%.
This slower than expected recovery is due to a number of factors.
The pressure on banks to make profits, combined with the fluctuating rates of interest, is preventing them from resuming lending.
The pace of growth may not be as fast as initially anticipated and the recovery could take longer.
Ecuador: Political instability before elections
Ecuador faces significant challenges in preparing for the February election.
BMI’s recent acquisition of GeoQuant (a firm that analyzes political risks) has revealed growing tensions on the sociopolitical front in Canada.
The outcome of the election will be influenced by these factors, which could have a significant impact on the economic and political stability of the country.
Ecuador is experiencing a period of instability, and this has led to a growing concern about the future of Ecuador, especially in view of its unpredictable climate.
These elections will be a test of Ecuador’s capacity to balance its political and economic challenges.
Latin America’s Energy Transition
Latin America faces significant challenges in its efforts to reduce its dependency on fossil fuels, even as the rest of the world transitions to cleaner energies.
The region, despite efforts to promote energy alternatives with low carbon emissions, is heavily dependent on gas and oil, especially in Argentina, Brazil and Mexico.
The projections show that emissions will rise in Latin America by 18,1% from 2024 to 2033. This increase is primarily due to the energy, transportation and industrial sectors.
As key economies try to find a balance between economic growth and environmental responsibility, this trend is causing concern about climate change in the region.
Uruguay: steady growth
Uruguay is projected to grow by 2.5% real GDP in 2024. This will be slightly revised to 2.3% growth for 2025.
This growth is in large part due to the resurgence in agriculture, which had been struggling for years.
The ability of Uruguay to maintain political and social stability while managing its economic resources has strengthened its resilience against global economic uncertainty.
The country is in a good position to continue growing as it continues capitalizing on its strengths.
The post Latin America’s growth forecast 2024-2025: Brazil and Colombia lead while Chile and Ecuador face obstacles may be updated as new information becomes available
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