Latin America and the Caribbean (LAC) face a complex global landscape characterized by geopolitical shifts, trade fragmentation, and heightened uncertainty. Within this environment, the growing trend of nearshoring—the relocation of production activities closer to consumer markets—emerges as a potential source of economic dynamism.

We are pleased to share a new publication in the academic journal Research in International Business and Finance, featuring the study: “US uncertainty shocks, credit, production, and prices: The case of fourteen Latin American countries,” authored by Carlos Giraldo, Iader Giraldo-Salazar, Jose E. Gomez-Gonzalez, and Jorge M. Uribe.

We are pleased to share a new publication in the academic journal International Journal of Bank Marketing. This time, it features the research titled “The adoption of fast payment systems (FPS) in Latin America: the role of financial literacy and cash-related beliefs”, authored by Carlos Giraldo, Iader Giraldo, Mauricio Losada-Otálora, and Nathalie Peña-García.

This blog post shares the story behind our recent working paper on how Colombia’s unique Gross Leverage Position in foreign exchange derivatives helped prevent a housing bubble from bursting and what emerging economies can learn from it.

Housing prices are among the most crucial determinants of a country’s financial and macroeconomic stability. As a key macroeconomic indicator, they significantly influence both consumption and investment, shaping economic and financial cycles. Given that housing represents a substantial share of household wealth, price fluctuations have far-reaching effects on consumption, savings, and labor market decisions.

In the first quarter of 2025, economic conditions in the United States reflect a labor market showing mixed signals, alongside persistent inflationary pressures. This context may limit the Federal Reserve’s (Fed) room to cut its policy rate, suggesting a scenario of higher international interest rates for a prolonged period.

The global economy is undergoing a reconfiguration process that is characterized by growing geoeconomic fragmentation, which is defined as the tendency for trade, investment, and global value chains to divide into geopolitically aligned blocs.

In recent years, fiscal matters have taken center stage in both academic research and economic policy debates. This heightened focus is largely a consequence of the significant rise in public debt levels observed across advanced and emerging economies in the aftermath of the COVID-19 pandemic. At the same time, the sharp increase in inflation experienced in many countries led central banks to implement substantial hikes in policy interest rates.

The financial landscape in Latin America is undergoing a transformative shift with the growing adoption of Fast Payment Systems (FPS). These systems, which facilitate real-time or near-real-time financial transactions 24/7, offer numerous advantages over traditional payment methods, such as cash and cards. With features like low transaction costs, accessibility, and immediate availability of funds, FPS is poised to revolutionize how payments are conducted.

Throughout the year, the global economy has experienced a slight deceleration in growth compared to 2023, accompanied by inflation rates aligning more closely with target levels. This trend has enabled central banks in the Eurozone and the United States to initiate reductions in interest rates. For Latin America, this development has led to a decline in the prices of most commodities—although they remain elevated—while external financing costs have gradually decreased, particularly in the second half of the year.

In the past three months, Latin America has faced reduced external and domestic financing constraints, supported by lower interest rates driven by easing inflation in most countries. This context has enabled us to revise the region’s annual growth projection to 2.1% for 2024. However, inflation remains above target in several countries, and public debt continues to rise as a percentage of GDP, underscoring the need for greater fiscal consolidation efforts.