Latin America
Latin America: regime score, economic regime, capital flows, currency outlook and FX-adjusted returns for Brazil, Mexico, Chile, Peru, Colombia, from the latest weekly snapshot.
Regime scorecard
Neutral regime, score +9 (Balanced); expanding economy; capital flows stable; geopolitical risk moderate. Strongest: market performance (+72), valuation & stability (+16). Weakest: capital flows (-19), geopolitics (-15).
| Factor | Weight | Score |
|---|---|---|
| Economic momentum | 30% | 0 |
| Capital flows & liquidity | 25% | −19 |
| Market performance | 20% | +72 |
| Geopolitical conditions | 15% | −15 |
| Valuation & stability | 10% | +16 |
IMF real GDP growth: 2.3% (2026), 2.5% (2027). Inflation 4.3%, policy rate 10.13%. Relative strength vs MSCI ACWI over 3 months: +7.0 pp. Currency (BRL) score +15, 1-year outlook ↑ / ↕.
Countries
| Country | Regime | Score | Economy | Capital flows | Geopolitical risk |
|---|---|---|---|---|---|
| Brazil | Neutral | +31 | Slowing | Inflows increasing | High |
| Colombia | Neutral | +7 | Expanding | Outflows increasing | Moderate |
| Peru | Neutral | 0 | Expanding | Stable | Moderate |
| Mexico | Neutral | −16 | Accelerating | Outflows increasing | High |
| Chile | Neutral | −34 | Contracting | Outflows increasing | Moderate |
Weekly brief: Latin America starts Neutral: Brazil-led rally faces runoff and soft growth
Regime: Neutral (score +9, Balanced), Expanding economy – strong market momentum led by Brazil is offset by soft growth and patchy capital flows.
What changed
This is the first weekly reading for Latin America, so there is no earlier score to compare. The regime is recorded as new from 25 October 2026. The region ranks 5th of 13, and Brazil ranks first among all the countries scored.
Economy and markets
The IMF trimmed regional growth to 2.3% for 2026 and 2.5% for 2027. Chile took the largest cut, to 0.6%, and Brazil was lowered to 2.2% on tight monetary conditions. Mexico was raised to 1.5%, and Peru stands at 3.0%. Market performance is the strongest factor (+72). The regional benchmark is up 22% year to date and has beaten MSCI ACWI by 7 points over three months, though it trails by 2.3 points over six. Colombia (+37% YTD) and Brazil (+32%) lead, while Chile (-11%) lags. The MSCI EM Latin America forward P/E of 9.7x is in line with MSCI EM.
Capital flows and rotation
Flows are stable overall but remain a weak factor (-19). Brazil stands out, with net foreign equity inflows of R$9.4bn in September and R$15.75bn on 1-9 October. Its ETF flows equal about 25% of fund size over three months. Mexico (-24%), Colombia (-15%) and Chile (-12%) show ETF outflows. The region is at the "economy improving" stage in the improving quadrant.
Currency
The currency score is +15 (BRL reference). The 1-year view is firmer but uncertain, and the 3-5-year view is volatile. High Selic carry supports the real, but forecasts diverge: MUFG sees 4.90 and Itaú 5.50 for 2027. For USD, EUR and GBP-based investors, carry has helped returns. However, the election and the fiscal path could reverse currency gains quickly, adding volatility on top of equity moves.
Risks and what to watch
Geopolitical risk is moderate for the region and high for Brazil and Mexico. Dates to watch: the Brazil runoff result (vote on 25 October, market reaction on 26 October), the FOMC on 28 October, Mexico’s Q3 GDP flash around 30 October and Brazil’s Copom decision on 4 November. The unresolved USMCA review and US tariffs remain a risk for Mexico.
Educational information, not investment advice. Scores are model outputs, not forecasts.
Source: Sonsero Regions weekly snapshot 2026-10-25 (market data from TradingView; IMF, central bank and fund-flow research). Scores and regimes are rules-based descriptions of conditions, not investment advice.