Latin America Economics Week Ahead

Research evidence excerpt

Latin America Economics Week Ahead

SMCA review remains a key downside risk to the recovery in the second half of the

year. The lack of demand side pressures will likely keep Banxico comfortable

sticking with its forward guidance of stable rates ahead.

Argentina Economics - Argentina's Tightrope: Reform, Trust, and the Race Against

the Clock. Argentina's reform process is advancing on solid macro foundations,

including a consolidated fiscal position and strong reserve accumulation, but faces

headwinds from weakening domestic demand and eroding public confidence.

Investor trust remains the most critical asset, as the costs of reform are immediate

while the benefits are long term. We identify key vulnerabilities in avoidable internal

political noise and a substantial 2027 debt maturity wall that requires proactive

market engagement. These risks are compounded by a potential global

environment of higher interest rates and capital outflows from emerging markets.

We believe Argentina must close these political and financial vulnerabilities by

building reserves and regaining market access to secure the reform's success ahead

of the 2027 elections.

Mexico Economics - Fiscal crossroads. Mexico’s path to fiscal stability remains

challenging. In 2025, the fiscal deficit reached 4.9% of GDP (4.3% excluding

support to the state oil company), exceeding the 3.9% target due to spending

pressures, weak oil revenues, and continued financial aid to the oil sector. Looking

ahead, fiscal consolidation plans for 2026 and beyond appear ambitious. They rely

on optimistic revenue projections while facing rigid spending commitments tied to

social programs and infrastructure, all within a difficult global economic

environment. These pressures have raised concerns among sovereign rating

agencies.