Last update: 16/11/2022

The war in Ukraine and the pandemic have represented two consecutive supply shocks to the global economy. As a result, inflation, which has risen in many countries, is among the world's main economic concerns this year. Against this backdrop, several Banco Santander's chief economists share their economic outlook for Latin American countries, which, generally speaking, have reacted early to inflation.

The year 2022 has seen the highest global rates inflation in several decades. Since 2021, faced with the looming scenario and in an attempt to control it, central banks in Latin America reacted and got ahead of their colleagues at the Federal Reserve or the European Central Bank. Latin American monetary authorities began raising interest rates nine months earlier, on average. Rate hikes at monetary policy meetings in other international economies have been recurrent since then. 

In this way, we have come to see the world's central banks raising rates at levels not seen since the 1980s. Precisely Latin America’s early action has allowed the region's central banks reputation to see a reinforcement. There is consensus today that the region looks to the economic future with good fundamentals.

Under this regional optimism, albeit cautious, and with a firm bet on the region's fundamentals, we organized a panel discussion with the chief economists of Grupo Santander's regional subsidiaries. During the round table, the heads of economic studies of the Latin American subsidiaries shared their economic outlook for their respective countries and analyzed the different opportunities and challenges that exist in each of them.

"The consensus is that monetary policy calibration will continue to be a latent challenge facing the region and the global economy. As for the outlook for 2023, we expect a slowdown in inflation and by the end of the year the first signs of a gradual recovery in economic activity," said Juan Cerruti, chief global economist at Banco Santander.

The case of Brazil

Within this context, the country that has resonated the most these days in Santander Group City is Brazil. With its early reaction in its monetary policy, the country has experienced three consecutive months of disinflation. That position has meant that despite the interest rate hikes in the country, economic growth expectations improved throughout 2022 - it has managed to move from the expected 1% growth by the country's Central Bank for 2022 at the end of last year, to a forecasted GDP growth of 2.7% this year.

During the International Banking Conference (IBC) in November 2022, Roberto Campos Neto, Governor of the Central Bank of Brazil, reflected on the rapid action and how monetary policy navigates between intervening too much or too little during the panel 'Keys to growth in a changing economy'. The event, which you can watch here, also included Banco Santander executive chair Ana Botín; Johannes Hahn, Commissioner for Budget and Administration of the European Commission; and Oby Ezekwesili, founder and CEO of Human Capital Africa.

Latin America in our DNA

Banco Santander sees in Latin America as a great opportunity to grow in the region through its financial network that extends from Rio Bravo to Ushuaia. The Group’s executive chair underlined this during the celebration of the bank's 75th anniversary in the region. At the recent XIX Santander Latin America Meeting, Ana Botín emphasized, "Latin America is better off than people think" and stressed, "in recent decades the region has done its homework and macroeconomic management has improved and is among the best in the world".

At Grupo Santander, Latin America is in our DNA and today we are the leading bank in the region, where we landed 75 years ago. Our presence in the continent is historical and dates back to the beginning of time: Santander was founded in 1857 in northern Spain with an aim to finance trade between that area and Latin America. Today, our global scale combined with local scale makes our presence in Latin American countries one of our core strengths as a Group.