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2.World growth is suffering from the slowdown in the emerging economies

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We have revised our world growth forecast for 2015 to 3.5%, 0.1pp less than predicted in February, whereas we have raised our estimate for 2016 a shade to 3.9%. The downward revision for 2015 is due to a brief slowdown in the US and the decline in activity in certain key EM hit by the slowdown trend in China



3.Volatility continues in LatAm markets as they watch out for the Fed

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The volatility in the region’s financial markets continued. Prices of the major financial assets and interest rates continued to weaken until mid-March, when they began to tick up again (without fully making up the lost ground) as the belief took hold that the Fed’s rate adjustment would be later and more gradual than was anticipated



4.Latin America’s growth will remain below its potential growth in 2015 and 2016

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We have revised our growth forecasts for LatAm downwards, to 0.6% in 2015 and 2.1% in 2016. By countries, the downward revision to 2015 growth forecasts is concentrated in Brazil, Mexico and Peru, but it affects almost all of the region. Unevenness will continue to prevail in the region and it will be the Andean countries and Paraguay which grow the most in 2015 and 2016



5.Inflation in the region has risen, but it should be back to target levels in 2015 or 2016

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Inflation rose in the region in spite of the cyclical weakness, but it should come back to central bank target levels at the end of 2015 or 2016, except in Brazil and Uruguay (although it will be within the target range in Brazil). With the exception of Mexico, inflation at the end of 1Q was above our estimate of one year ago and also three months back



6.The window of opportunity for cutting interest rates in LatAm is closing

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Despite the cyclical weakness, the window of opportunity is closing up for a cut in interest rates by the Andean central banks given the persistence of inflation. This means that instead of the interest rate cuts in the Andean countries which we were counting on three months ago, the most likely occurrence if that rates will be kept at current levels till at least mid-2016





8.Unchanged prospects for fiscal deficits, except in Brazil and Argentina

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Prospects for fiscal balances are still unchanged with respect to the situation three months ago, except as regards Brazil, where the public deficit is likely to be significantly larger than expected. The increase in the forecast for the public deficit in Brazil in 2015 (from an estimated -4.4% in January to -5.6%) is despite the bigger macroeconomic correction underway.






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