After 2024 slump, Latin American earnings expected to surge 16% in 2025

Latin America's corporate landscape, marked by a challenging 2024, is projected to experience a significant resurgence in 2025.

According to JPMorgan's calculations, company earnings are expected to rebound by approximately 16% next year.

This positive forecast encompasses nearly all countries within the region, with the exception of Colombia, all anticipating double-digit earnings growth.

2024: a year of contraction and currency headwinds

The current year has presented a stark contrast.

JPMorgan analyst Cinthya Mizuguchi, in a client note released late Wednesday, stated that, "For 2024, LatAm stands as the worst region both in terms of performance but also for year-end earnings outlook."

The analyst attributes a significant portion of this downturn to currency depreciation, noting that, "FX depreciation played a large role in this deterioration of expectations, but the outlook for 2025 seems brighter."

This assessment reflects the broader impact of a strengthening dollar on emerging markets; the greenback has appreciated nearly 5% against a basket of currencies since the beginning of the year.

Mizuguchi estimates a 24% contraction in earnings for Latin American companies in 2024.

Sector-specific outlooks: a mixed bag

While the overall picture for 2025 is optimistic, sector-specific performances are anticipated to vary.

Mizuguchi forecasts robust double-digit growth for several key sectors, including energy, industrials, financials, technology, healthcare, and telecommunications—sectors that experienced sharp contractions in 2024.

However, the consumer discretionary sector is projected to be an exception, with an expected contraction of 9% in 2025.

This follows a remarkable 136% surge in 2024, suggesting a potential correction.

Brazil and Mexico leading the charge

Among the major economies, Brazil and Mexico are anticipated to be key drivers of this regional rebound.

Earnings growth for companies in these two countries is estimated to reach approximately 15% and 14%, respectively, in 2025.

Equity market performance: a year of losses

The challenging earnings environment has been reflected in equity market performance.

The MSCI Latin America index has experienced a significant decline of 25% year-to-date.

This downturn is even more pronounced in dollar terms, with the Brazilian and Mexican MSCI indices falling approximately 27%.

This contrasts sharply with the broader MSCI emerging market equity index, which has seen a gain of over 5% during the same period.