Challenges and Opportunities in the Region: Trump's Impact on Latin America

Latin America is facing challenges caused by the political uncertainty in the United States, but it has tools to cope with the consequences of an unstable global environment, Fitch Ratings commented on Monday, assigning a "neutral" outlook for Latin American countries in 2025. Fitch "estimates that growth in the region will increase to 2.2% in 2025 from 1.8% in 2024, driven by a rebound in Argentina and stability in other nations," the agency noted. They also pointed out that the trade and immigration policies of Donald Trump's future administration are uncertain and pose "a risk to the region."

Trump will resume the presidency in January after winning last month's election. "The tightening of U.S. immigration policies will impact economies that heavily rely on remittances, although it’s unclear how effective mass deportations or other actions that could affect these incomes will be," Fitch stated. The agency also emphasized that the decline in commodity prices, critical for the region's economy, along with instability in external financing "could present a challenge for central banks, especially those still dealing with persistent inflation issues." However, they expressed that "the strength of banking systems, a good level of external liquidity reserves, and, in some cases, the flexibility of currencies will help mitigate the impact of these disruptions."

The situation in Latin America within the context of U.S. politics is complex, but it is encouraging that the region's economies have measures in place to tackle these challenges. It is vital to strengthen local financial structures and seek strategies to diversify income sources, such as developing more robust internal markets to reduce reliance on remittances and promoting foreign investment to maintain sustainable growth.