The growth in Latin America is very likely to disappoint relative to expectations. We're expecting about 1% growth for 2023. Obviously, the U.S. economic outlook is always important for Latin America. So, while the Fed continues raising rates through 2023, central banks over there will have to keep up pace because it's something important not to lose count in terms of the currency stability. But that, at the same time, tends to kind of produce slowdown in those economies, right. So central banks will have their hands a little bit tied in terms of providing support for the economy as the Fed continues increasing rates.
Mexico, in particular, is very closely connected to the U.S. economy. We know because of the trade ties, the global supply chains, so we expect growth there to be in the order of 1.3%, which is well below their trend growth of 1.8
Latin America among the emerging countries, in general, were one of the regions that recovered faster from the pandemic and that forced central banks over there to really hike as the economies were recovering and increase rates to pump the brakes, basically, to avoid the inflationary trends.
Going forward for 2023, central banks will probably be a little bit limited in their action by what the Fed is doing. The local currencies, the Brazilian real, the Mexican peso, and so on, move significantly against the U.S. dollar when the central banks don't keep up pace with the Fed, right. So in that sense, as we expect the Fed to increase rates to about 5%, we expect central banks there to maintain pace.