Moody’s Ups Growth Forecast for Latin America, Fueled by Mexico’s Momentum

The robust performance of the region’s second-largest economy in the first half of the year has prompted the credit rating agency to revise its growth projections upward

México apuntala un mayor crecimiento para América Latina.
September 11, 2023 | 01:00 AM

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Buenos Aires — Moody’s Investors Services has hiked up its growth projections for Latin America in 2023, mainly due to Mexico’s strong performance in the first half, according to a report from the rating agency. In its June report on the region, the US firm had predicted a 1.2% real Gross Domestic Product (GDP) growth for Latin America this year, whereas now it is expecting 1.5%.

But not all is rosy for the region. Moody’s also anticipates a significant economic contraction in Argentina, as well as a setback in Chile’s GDP.

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Mexico Leading the Way

Moody’s projects that the Mexican GDP will expand by 3.3% in 2023, following a 3.9% growth in 2022. The financial firm attributes these optimistic expectations for the region’s second-largest economy to its strong performance in the first half of the year.

This growth is attributable to increased investments, especially in non-residential construction, Moody’s noted, adding that some of these investments are linked to nearshoring activities and public-sector initiatives, where the government has accelerated the execution of key projects.

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However, the document also cautions that high local interest rates, declining business confidence, and weak demand from the United States will exert pressure on domestic demand for the remainder of the year.

Moody’s has also adjusted its projections for Chile. Initially, it predicted a 1% decline in the country’s economy, but it now foresees a more moderate contraction of 0.5%. Meanwhile, the consultancy firm estimates that Peru will achieve a 1.3% growth rate.

Proyecciones de Moody's para países emergentes en 2023dfd

Brazil GDP Growth in 2023

Brazil, the largest economy in the region, is expected to grow by 2.3% in 2022, while Colombia is projected to grow by 1.3%, aligning with Moody’s forecasts.


Challenges for Export-Oriented Economies Moody’s anticipates that economic growth in emerging markets will remain relatively robust over the next 12 to 18 months, “despite the challenging global economic landscape.”

However, it notes a “notable exception” in the case of China. Moody’s has downgraded its growth projections for China from 4.5% to 4% for 2024 due to significant economic challenges. Nevertheless, Moody’s maintains its 5% growth expectation for China in 2023.

“Economic performance varies significantly from one region to another. In this update, we have revised our projections downward for several economies that are more reliant on global trade. In contrast, we have increased our projection for Latin America’s GDP growth in 2023 compared to our June forecast,” summarizes Moody’s.

Furthermore, Latin America is expected to achieve a 1.5% growth rate, while the Asia-Pacific region is projected to grow by 5.2%.