Sept. 23 (Bloomberg) -- Latin America’s economic recovery will be “remarkably strong,” bolstering currencies and spurring interest rate increases in 2010, Barclays Plc said.

“We expect a strong 2010,” Barclays analysts wrote in the bank’s emerging-markets quarterly report dated yesterday. “Robust growth prospects in Latin America bode well for capital inflows, equity prices and FX appreciation.”

The Brazilian real and the Mexico peso offer the most potential “to trade the region’s rebound,” the analysts wrote. They raised their estimate for Latin America growth in 2010 to 4.4 percent from 3.6 percent.

Central banks across Latin America reduced interest rates to record lows to spur consumer spending amid the worst global recession since the Great Depression. Mexico may raise its rate in March, followed by Chile in April, Barclays said. Brazil may increase its benchmark rate in July, according to the report.

Peru may be the only country in Latin America to cut interest rates further, Barclays said.

“With lower-than-expected growth and below-target inflation, it is not possible to discard further cuts,” the report said.

Peru’s economy will expand 0.9 percent this year, according to Barclays estimates, below the 2.5 percents forecast by the government. Inflation, which slowed for a ninth month in August to 1.87 percent, will end 2009 at the lower end of Peru’s central bank 1-to-3 percent target rate, the bank said Sept. 11.

Barclays said the global economic rebound will be “sharper and last longer than we previously anticipated,” with all the regions contributing to expansion. The growth forecasts for the Europe, Middle East and Africa region, known as EMEA, was increased to 2.9 percent from 1.4 percent expected in the previous quarterly report.

To contact the reporter on this story: Veronica Navarro Espinosa in New York at vespinosa@bloomberg.net

Last Updated: September 23, 2009 12:56 EDT