GDP posted growth of 9.4% year-on-year in the second quarter, the highest rate in 23 years. According to high-frequency data, economic recovery appears to have continued between July and September albeit at a slightly slower pace.
Low inflation will allow the Central Bank to maintain an accommodative stance in the short term; any rate hikes next year will be gradual.
Banks’ profitability and credit quality may deteriorate in 2022 as loan restructuring measures expire and lagged pandemic effects kick in.
The exchange rate may further depreciate amid uncertainty over the country’s fiscal prospects and the outcome of the 2022 elections.
While tourism appears to be on a strong trajectory, the spread of Omicron in Europe and the United States could reverse its recovery.
