Global Insight · 23 September 2026

Latin America

01Argentina

Political and economic conditions point to a turbulent path toward the 2027 elections

THE SITUATION. Patricia Bullrich, La Libertad Avanza’s Senate leader, questioned cuts to disability benefits in the proposed 2027 budget, reopening a politically sensitive dispute. Meanwhile, second-quarter economic data point to a challenging backdrop for Milei.

THE STAKES. Internal divisions continue to undermine the administration’s legislative agenda. Bullrich said she had not been aware of the cuts, despite being part of the government’s political strategy group. Her increasingly public criticism also reflects Milei’s weak polling numbers and the growing political cost of defending unpopular measures. Fiscal consolidation remains central to Milei’s agenda, but sustaining it will require political support that the government is struggling to organize. Economic stagnation compounds the problem by limiting the improvement in living standards that could help rebuild support. Together, these pressures point to a difficult path to Milei’s reelection in 2027.

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02Brazil

STF disputes could hurt Lula, but the election remains very competitive

THE SITUATION. The Banco Master investigation continues to generate disputes within the Supreme Federal Court (STF). Separately, Lula announced an approximately 15% increase in Bolsa Família, taking the minimum payment from R$600 to R$691 in October, with an additional annual cost of R$22.7 billion in 2027 and 2028.

THE STAKES. Lula is more exposed to the STF crisis, but its electoral impact remains unclear. The dispute continues to dominate headlines and reinforce discontent with the political establishment. Expect a very close election, with a growing risk that the losing side contests the result. A court weakened by its own internal conflict would have less credibility in managing such a dispute, although we still expect a quick resolution. The increase in Bolsa Família should provide Lula with some electoral support. It also adds to fiscal pressures that will be difficult to address regardless of who wins.

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03Mexico

Morena’s candidacies highlight the limits of Sheinbaum’s political influence

THE SITUATION. The federal electoral process began on 10 September ahead of the 6 June 2027 midterms. Sheinbaum has also presented some of Morena’s gubernatorial candidates, bringing the party’s internal balance of power into sharper focus.

THE STAKES. The selections show the limits of Sheinbaum’s influence within Morena. She has had to accept candidates backed by incumbent governors, whose control over local political organizations gives them considerable bargaining power. Some candidates could also pose challenges for the president due to corruption controversies and potential scrutiny from U.S. investigators. Even so, we expect Morena to win most races and remain Mexico’s dominant political force, given the opposition’s weakness. Electoral dominance will coexist with growing internal tensions as politicians position themselves for the 2030 presidential succession. Managing those rivalries will be an increasingly important constraint on Sheinbaum’s leadership.

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04Venezuela

Washington will prioritize oil deals over Venezuela’s political transition

THE SITUATION. The White House has announced an informal encounter between Donald Trump and acting President Delcy Rodríguez during the UN General Assembly in New York, as the second round of political talks draws to a close.

THE STAKES. Washington’s priority remains economic influence and oil cooperation, with little urgency to secure a political transition. Trump’s willingness to meet Rodríguez reinforces our view that the White House is comfortable working with her administration while pursuing those objectives. That reduces the opposition’s leverage as Rodríguez has less reason to make political concessions.

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Global and U.S.

05Canada and Europe

New trade arrangements will create opportunities for Latin America

THE SITUATION. European Commission President Ursula von der Leyen proposed making Canada the EU’s first associate member. Mark Carney supported closer cooperation in his address to the European Parliament.

THE STAKES. Reaching a meaningful agreement will be difficult, but the search for new arrangements creates opportunities for Latin America. The proposed status lacks an agreed legal framework, and EU member governments have raised questions about its scope. Brussels’ interest does not ensure agreement across the bloc. Still, the initiative reflects a broader effort by countries and regions to diversify their partnerships. Latin American governments and companies can find openings in those efforts.

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06UN General Assembly

Little substantive progress is likely at UNGA

THE SITUATION. The UN General Assembly’s general debate is scheduled for 22–26 and 28 September. AI is set to feature prominently alongside the conflicts and geopolitical tensions dominating the international agenda.

THE STAKES. We expect little substantive progress on AI or the wider agenda. Xi Jinping is not attending, and Trump sees limited value in the UN as a forum for cooperation. More broadly, the divisions among major powers leave little room for common commitments. The gathering will offer a clear picture of the fragmented geopolitical environment, with bilateral meetings carrying more weight than the formal proceedings. The upcoming Trump–Xi summit is the more consequential event to watch.

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In depth

07The U.S., Latin America, and China

U.S. pressure to constrain China will remain high throughout Latin America

Trump and Xi are scheduled to meet on 24 September, with trade, AI, and critical minerals at the center of the agenda. The current tariff truce expires on 10 November. Both governments want to sustain the thaw while managing their competition.

Latin America is unlikely to feature prominently in the summit. Nevertheless, limiting China’s role in the region will continue to shape U.S. foreign policy. Washington lacks a coherent regional framework and sufficient incentives to complement its pressure on governments. China’s importance as a trade and investment partner further limits what that pressure can achieve.

Even U.S.-friendly administrations will try to preserve good relations with China.

Governments and companies will face a more difficult balancing act as U.S. pressure intensifies. Critical minerals, procurement, and investment decisions will increasingly be viewed through the lens of strategic competition. The challenge will be to maintain access to Chinese markets and capital while managing Washington’s demands.

Even U.S.-friendly administrations will try to preserve good relations with China. Mexico is the clearest exception since Sheinbaum’s priority is to preserve the trade relationship with the United States. That gives her stronger incentives to limit some Chinese participation, particularly where doing so supports domestic industry or helps protect access to the U.S. market. South American governments, with different trade and investment relationships, have less room to follow the same approach.

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On the map · U.S. diesel exports

The Trump administration is considering a temporary ban on diesel exports from the United States. The top five regional importers of U.S.-produced diesel are marked in red.

Mexico78.9
Chile45.7
Brazil36.5
Ecuador30.9
Peru25.7

U.S. distillate fuel oil exports by destination, calendar year 2025, million barrels. Source: U.S. Energy Information Administration, Exports by Destination (released 31 August 2026). EIA reports diesel within distillate fuel oil. U.S. territories excluded.

What we find interesting

Citi’s regional outlook. An interesting analysis offering a very constructive view of Latin America’s external and domestic conditions. It probably underestimates the global geopolitical risks that will create headwinds and the domestic political constraints on reforms.

What we are watching

24 September: Planned Trump–Xi summit in Washington.
Ongoing: Argentina’s budget negotiations; Brazil’s STF proceedings and campaign; Morena’s remaining candidate selections.

Published in partnership with DK Advisors. Information as of 20 September 2026 for the 23 September edition. Prepared exclusively for client distribution. Not for onward circulation.