How Mexico and Brazil carry regional economic performance

A better outlook for Brazil and Mexico led the IMF to increase its growth estimates for the region overall from 1.9% to 2.3% in 2023 and from 2.2% to 2.3% in 2024.

"The upward revision to 2023 since July reflects stronger-than-expected growth in Brazil, revised upward by 1.0 percentage point to 3.1%, driven by buoyant agriculture and resilient services in the first half of 2023. Consumption has also remained strong, supported by fiscal stimulus," according to the IMF’s quarterly report.

"The upward revision for the region also reflects stronger-than-expected growth in Mexico, revised upward by 0.6 percentage point to 3.2%, with the delayed postpandemic recovery taking hold in construction and services and spillovers from resilient US demand," it added.

Brazil’s economy, the largest in the region, is expected to grow 1.5% next year, revised upward from 1.2%, and Mexico’s 2.1%, revised upward from 1.5%.

Although regional economic performance still lags the global trend, perceptions have improved.

"Latin America has benefited as a whole due to global geopolitical issues because it is far from the main centers of global conflicts at the moment. Furthermore, upward pressure on the oil price, which the crisis in Israel could generate, has a positive impact on the region because it generates a generalized increase in the price of commodities exported by Latin America," Luciano Rostagno, chief regional strategist at Banco Mizuho do Brasil, told BNamericas.

"The two largest countries in the region have different perspectives in relation to the perception of international investors. Brazil attracts more attention from investors due to its potential related to the energy transition, while in Mexico, due to its proximity to the US, the drivers are related to nearshoring," Carlos Kawall, partner at asset management firm Oriz Partners and former Brazilian treasury secretary, told BNamericas.

The IMF expects global growth of 3% this year, flat compared to the previous estimate, and 2.9% in 2024, compared to 3% before.

Previously, the World Bank also improved its outlook for the region.