The International Monetary Fund (IMF) has significantly raised Brazil's GDP growth forecast for 2024 to 3%, up from its July projection of 2.1%.

In contrast, Mexico's forecast has been cut to 1.5% from 2.2%, with Latin America and the Caribbean as a whole expected to grow by 2.1%, exceeding July forecasts by 0.3 percentage points.

Regional growth is projected to remain relatively stable compared to 2023's 2.2% expansion, with acceleration to 2.5% anticipated in 2025.

"[Brazil's GDP growth forecast] is an upward revision … owing to stronger private consumption and investment in the first half of the year from a tight labour market, government transfers, and smaller-than-anticipated disruptions from floods," said the IMF in its latest World Economic Outlook.

However, it warned that growth could moderate in 2025 due to restrictive monetary policy and an expected cooling of the labour market.

Mexico's lower forecast reflects weakening domestic demand due to monetary policy tightening, with a further slowdown expected in 2025.

The divergence extends to monetary policy, with Brazil maintaining a hawkish stance whilst Mexico eyes potential rate cuts.

Meanwhile, Argentina remains the region's outlier, with GDP expected to contract 3.5% in 2024, more than twice the 1.6% decline recorded in 2023. However, a substantial recovery of 5% is forecast for 2025.

INFLATION
While celebrating the region's overall success in controlling inflation, the lender noted that some upward pressure remains.

Factors include robust wage growth affecting services sector prices in Brazil and Mexico, weather events in Colombia, and electricity tariff hikes in Chile.

Coffee prices have surged 33.8% due to weather-related supply concerns in Brazil and Vietnam.

Despite these challenges, Brazil's agricultural outlook remains positive, with Conab forecasting record grain production of 322.47mn tonnes for 2024-2025, an 8.3% increase from the previous harvest.

IMF forecasts (in % change)	GDP growth 2023	GDP growth forecast 2024	GDP 2025 growth forecast	Inflation 2023	Inflation forecast 2024	Inflation forecast 2025
Brazil	2.9	3.0	2.2	4.6	4.3	3.6
Mexico	3.2	1.5	1.3	5.5	4.7	3.8
Argentina	-1.6	-3.5	5.0	133.5	229.8	62.7
Colombia	0.6	1.6	2.5	11.7	6.7	4.5
Chile	0.2	2.5	2.4	7.6	3.9	4.2
Peru	-0.6	3.0	2.6	6.3	2.5	1.9
Ecuador	2.4	0.3	1.2	2.2	1.9	2.2
Venezuela	4.0	3.0	3.0	337.5	59.6	71.7
Bolivia	3.1	1.6	2.2	2.6	4.3	4.2
Paraguay	4.7	3.8	3.8	4.6	3.8	4.0
Uruguay	0.4	3.2	3.0	5.9	4.9	5.4
Latin America and the Caribbean	2.2	2.1	2.5	14.8	16.8	8.5