Latin America outlook 2023

Global Outlook: what to watch in Latin America

In EIU’s latest Global Outlook video, head of global forecasting and economics, Tom Rafferty, and senior analyst, Michelle Campbell, discuss what to watch in Latin America for the year ahead.

There will be a number of notable elections across the region in 2024 with voters going to the polls in Sint Maarten, El Salvador, the Dominican Republic, Panama, Mexico, Uruguay and Venezuela. EIU expects there will be a pause in the anti-incumbency wave and that policy uncertainty will ease as new governments settle into office. However, democratic backsliding and social unrest will remain risks in countries such as El Salvador and Venezuela. 

An upside risk for economic activity in the region next year is nearshoring. Rising geopolitical risks are driving global supply‑chain shifts; although these shifts are still in their fairly early stages, there are indications that Latin America has already begun to take advantage. Mexico will be the biggest beneficiary of this trend while other countries such as Panama and Costa Rica will also profit from efforts to develop a regional semiconductor supply chain. 

“Latin America has huge lithium reserves, and investments in that sector will continue in 2024, notably in Argentina, which currently has more light‑touch environmental and local‑content regulation than its neighbours in the “lithium triangle”, Bolivia and Chile. However, governments will have to balance this encouragement of foreign investment in the lithium sector with demands by voters for environmental protection.”

Michelle Campbell, Senior analyst, LATAM, EIU

Climate-related issues will also be in the forefront in 2024. The impact of El Niño will vary across the region, with positive and negative economic consequences for different parts of Latin America. For now, however, we do not expect the phenomenon to be severe enough to reverse the current disinflationary trend and we therefore expect monetary easing to continue in 2024. Additionally, deforestation will continue to be an important issue but the EIU expects slow progress on this front despite positive discussion around protecting the Amazon rainforest.

The analysis and forecasts featured in this piece can be found in EIU’s Country Analysis service. This integrated solution provides unmatched global insights covering the political and economic outlook for nearly 200 countries, enabling organisations to identify prospective opportunities and potential risks.