Latam | The Middle East's echo in the region

Summary

The conflict in the Middle East has caused a global economic shock in 2026 that is impacting Latin America. Rising commodity prices and logistics costs have triggered a spike in inflation and a slowdown in economic growth.

Key points

• Key points:
• Countries like Peru and Chile, after being firmly anchored to their inflation targets, have fallen outside of them this year due to the impact on prices. The region is expected to miss its inflation targets and resume a downward trend in 2027.
• Mexico, Uruguay, and Chile will record growth figures below 2.0% in 2026. In contrast, Peru, Argentina, and Paraguay will maintain better relative economic performance.
• Colombia faces a unique scenario with a local inflation spike that has triggered a highly contractionary monetary policy, affecting its economic activity in 2027.
• Higher debt levels expose the region to global rate-hiking cycles. Despite this, Latin American currencies are showing appreciation or stability due to improved external balances.

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