Publications

Public administrations have awarded contracts and grants equivalent to 75% of the planned investments financed with transfers from the Recovery and Resilience Facility (3.6% of GDP). However, the pace of implementation has slowed, and it will need to be accelerated to meet the planned deadlines and objectives.

This presentation analyzes the recent evolution of monetary policy in Latin America and three of its main challenges: its interaction with fiscal policy, the increase in natural interest rates, and the impact of increased uncertainty on economic policies.

Public deficit is expected to decline to 2.6% of GDP in 2025 and 2.2% in 2026, driven by the cyclical improvement in activity, the lower impact of DANA-related expenses, and the normalization of tax rates. Reaching 2026 forecast will be require new measures of around 0.4 percentage points of GDP to comply with fiscal rules.

The Brazilian economy has been losing momentum, reinforcing deceleration prospects. GDP is expected to slow to 2.2% in 2025 and 1.5% in 2026, helping inflation ease to 4.8% by end-2025 and 3.7% by end-2026, paving the way for a monetary easing cycle from early 2026.

The sensitivity on growth and employment might continue to shape the policy mix with a trade-off of a slower disinflation path. We expect the Medium Term Program (MTP), to be revised in early September, to have more color on the political preferences on near term growth outlook.

Spain needs to recalibrate its fiscal policy to ensure a greater emphasis on spending in production, infrastructure, education, and new technologies. This would help boost long-term growth and improve well-being.

Argentina’s economy kept recovering in Q2 2025, driven by fiscal order, a re-monetization strategy, and a flexible exchange rate scheme. The outlook is still shaped by the electoral context and the challenge of ensuring lasting stability in a volatile global environment.