LATAM Today: July 16, 2026

Research evidence excerpt

LATAM Today: July 16, 2026

Goldman Sachs LATAM Today

are needed and sees headline deficits of around 1.1-1.2% of GDP as compatible with

the fiscal rule. Under an alternative scenario, in which congress approves the

Reconstruction bill currently being discussed, the government projects that higher

growth would offset the fiscal cost of the bill—it entails both lower revenue and higher

spending—leading to an improved fiscal performance. This path, however, would still

require additional fiscal efforts of between 0.6% and 0.9% of GDP to be consistent with

the structural balance targets set out in the fiscal rule.

DETAILS:

1. The macroeconomic outlook for 2026 saw some changes. Real GDP growth is

expected to reach 1.8% (0.3pp lower than in the previous report) with non-mining

activity expanding 2.2% (compared to 2.4% before) and mining activity contracting

by 0.9% (flat in the 1Q26 report). The Ministry of Finance expects inflation to

average 3.6% in 2026 (0.1pp lower than in the previous report) and a somewhat

stronger currency (900 average Pesos per dollar vs. 910 in the previous report).

Copper prices are expected to average US$5.9 per pound (US$5.5 per pound in the

1Q26 report).

2. The government noted that the fiscal baseline projections incorporated in the

second quarter’s public finance report consider realized data through May, spending

restraint measures already unveiled, as well as bills approved between April and

June, but excludes the effect of the Reconstruction bill currently being discussed in

congress.

3. Budget commitments and revenue forecasts for 2026 result in a 2.0% of GDP deficit,

0.4pp smaller than in the first quarter’s public finance report. The headline number

is consistent with a 2.6% of GDP structural deficit, consistent with the fiscal rule