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Goldman Sachs reports on a tight labor market in Brazil and a downgraded 2026 growth outlook for Mexico, as central banks across the region navigate diverging inflation and growth signals.

Key Takeaways

• 1.The Brazilian labor market remains exceptionally tight with unemployment at 5.5% (seasonally adjusted), adding cost-push pressures on services inflation.
• 2.Mexico's 2026 growth forecast was downgraded by 50bp to 1.1% due to weak 1Q activity, with a widening output gap expected through 2027.
• 3.Brazil's credit cycle is facing headwinds from tight monetary conditions, though public bank lending and federal facilities ahead of 4Q26 elections may cushion the impact.

Table of Contents

• BRAZIL
• Tight Labor Market Backdrop; Declining Participation Rate
• Brazil: Credit Origination Firmed in April; High Household Indebtedness and Debt Service
• CHILE
• MEXICO
• QIR: Weaker 2026 Real Activity Outlook; Larger Output Gap; Dovish Analytical Studies' Results
• Mexico: Still Tight Labor Market; Higher Participation Rate and Informality
• Disclosure Appendix

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