RGE maintains the view that Latin America will expand in 2010 after contracting over 2% in

2009. Better global growth prospects and solid commodity prices will support growth in the
region; however, differentiation in domestic demand dynamics will play a key role. We have
revised up our growth expectations for Brazil, Mexico, Argentina and Peru; maintained our
projection for Colombia; and lowered them for Chile (due to the earthquake) and Venezuela.
Mexico will benefit the most from the upward revisions to our U.S. growth outlook, while
domestic demand will likely catch up in Q2 2010. Meanwhile, Brazil’s stronger-than-expected
domestic demand will be enhanced by the relatively benign external backdrop.

We continue to believe that inflation will climb in 2010; however, it will remain within the central
bank inflation target ranges, except for Mexico. In most countries, high food prices, as a result of
adverse weather conditions, have continued to deteriorate inflation dynamics and expectations
at the beginning of 2010, while demand-pull inflation pressures have stayed relatively calm.
Moving forward, however, we expect those dynamics to revert. Inflation pressures stemming
from food prices will likely normalize, as seasonal effects wear off, while the closing of the
output gaps, though at different speeds, will exert upward pressure on prices. Moreover, the
lack of external supply side shocks on prices and stable/strong currencies will play in favor of
our inflation outlook for the region.

RGE maintains the view that current account deficits will widen in 2010—and surpluses will
narrow—as growth in domestic demand will likely outpace external demand. Meanwhile,
positive global financial conditions and risk appetite, together with LatAm’s attractive growth 
dynamics, will likely continue drawing capital flows, reducing balance of payments issues
whenever they arise. Moreover, international reserves will likely continue growing as central
banks intervene to avoid sharp appreciation of the currencies and to improve external buffers.

RGE still believes that wider growth and interest rate differentials, as well as a relatively weak
U.S. dollar and solid commodity prices, will continue to support LatAm currencies. Since RGE
expects the Fed will remain on hold for a prolonged period of time, until Q1 2011 or perhaps
beyond, and China will only map out excess liquidity slowly, global liquidity conditions will stay
elevated and risk appetite—in the absence of systemic events—will remain supportive.

Lastly, the presidential electoral cycle in the main LatAm countries continues with Colombia in
May and Brazil in October. In both cases, a second voting round will likely be needed to
determine the next president. In Colombia, it is RGE’s view that whoever wins the elections is 
likely to maintain Colombia’s current domestic security and market-oriented policies. The latest
polls by Ipsos Napolen Franco (March 2010) suggest that Juan Manuel Santos from the U party
and Noemi Sanin from the Conservative party—both strong supporters of President Alvaro
Uribe successful policies—are leading the pack with 36% and 17% of responses, respectively.
In Brazil, we maintain the view that regardless of who takes power among the leading
contenders, Brazil’s current economic policy will most likely be maintained. However, the 
markets will pay close attention to fiscal dynamics and initiatives on structural reform after the
elections. The latest Datafohla poll (March 2010) indicates that Jose Serra from the Social
Democratic Party (PSDB) leads the race with 36% of responses, followed by Dilma Rousseff
from the Workers Party (PT) with 27%. Serra also leads the race in a possible second round.