Latin America’s Biggest Economies See Unemployment Rate Decline

Photo of author

By LatAm Reports Editor

In recent developments, Brazil and Mexico, the two largest economies in Latin America, have reported a decrease in unemployment rates, a sign of resilience amidst high-interest rates and global economic challenges.

As per the latest official data, Brazil’s unemployment rate in October fell to 7.6%, a significant drop from the previous month, marking the lowest rate since 2015. The number of unemployed individuals in Brazil also decreased, reaching 8.3 million. Mexico witnessed a similar trend, with its jobless rate declining to 2.75% in the same period.

These improving labor market conditions are contributing to the robust economic performance of both countries. Brazil’s growth has been buoyed by a series of bumper harvests, which have been instrumental in reducing unemployment for seven consecutive months. Mexico, meanwhile, has seen a surge in foreign investment aimed at serving North American markets, alongside strong domestic demand.

In Brazil, the total employed population surpassed the 100 million mark for the first time, although about 20 million workers are still considered underutilized. Mexico’s employment figures also showed positive growth, with the total number of employed people reaching 59.4 million, an increase of one million from the previous year.

Alberto Ramos, the chief Latin America economist at Goldman Sachs Group Inc., highlighted the significance of the tight labor market. He pointed out that it supports the cautious approach in monetary policy adjustments. This tight labor market scenario is also bolstering consumer confidence in both countries, leading to higher demand for goods and services.

The improved economic outlook is not limited to these two nations but extends to the broader Latin American region. Mexico’s Central Bank, Banxico, has recently upgraded its economic growth forecasts for 2023 and 2024 to 3.3% and 3%, respectively. Banxico Governor Victoria Rodriguez Ceja noted that the combination of resilient external demand and dynamic domestic spending was driving this growth. She also mentioned the possibility of reducing the interest rate from its current level of 11.25% in early 2024.

In Brazil, the central bank, led by Roberto Campos Neto, views the domestic job market as dynamic with high levels of hiring. However, there is an expectation that the economy will experience a slowdown in the coming quarters.

These developments come as a positive sign for the Latin American region, with Brazil and Mexico setting the pace for economic recovery and growth, despite the global economic headwinds.