1Q26_ Quarterly Outlook Report_Final_EN - Flipbook - Page 11
T H E P LUMB LI N E | A RETU RN TO F I RS T PRI N CI PL ES
Mexico underperformance to continue, against firm growth along the Pacific, with Brazil in
between
4%
Annual GDP growth
3.4%
2.9% 3.0%
3%
2.6% 2.5% 2.5% 2.5%
3.3% 3.2% 3.2%
3.0%
2.6%
2.2%
1.8% 1.9%
2%
1.6%
1.4%
1.0%
1%
0.6%
0.1%
0%
Mexico
Brazil
2024
2025 estimate
Chile
2026 forecast
Colombia
Peru
2027 forecast
Source: Scotiabank Economics., Scotia Wealth Management.
We anticipate that 2026 Chilean and Peruvian GDP growth will stick to around the same pace
recorded in 2025 (around 2.5% and 3%, respectively), with both countries enjoying solid
momentum in investment and benefitting from a rise in global commodity prices. In Chile, further
to major mining and infrastructure developments, our attention will shift to emerging plans in
sectors potentially more responsive to political cycles, as well as to firms’ hiring intentions,
following the election of Kast to the presidency last month (whose term begins on March 11). From
a social standpoint, Chileans will be hoping for a reduction in crime – their top demand from the
new government according to polls.
As in 2025, we expect that Peru will not be materially afflicted by international developments or
political uncertainty in 2026, as ongoing strength in copper and gold prices, healthy labour
markets and inflation, low interest rates, and another round of pension withdrawals more than
offset these risks. The key to whether growth will speed up in Peru will rely heavily on the outcome
of the 2026 elections. Our growth forecast going forward assumes political turbulence similar to
the last decade. Should the 2026 outcome be more encouragingly pro-market, at both the
executive and congressional level, growth could quicken. As is the case under every new
government, the BCRP’s board of directors will be renewed in 2026, with much of the country’s
economic future depending on the composition of one of the country’s most highly respected
institutions.
Key risks
Several key issues will affect the economy, rates, and markets over the coming quarters. Some
suggest more ebullience, while others suggest more caution may be required. Generally, the key
challenges we see can be placed in two buckets: (1) how are economies adapting to changes
already working themselves through the system and (2) what other changes might occur?
The most immediate concern relates to equity market performance. Global equity markets
posted solid gains last year despite the chaotic policy environment. While much of the gains have
been in AI-exposed companies, other sectors also performed well. These gains have been
10
