Global central banks have once again loosened their monetary policy, and once again investors are abruptly allocating billions of dollars of portfolio cash to Latin America and other emerging markets. The rush of inflows to Latin American bonds and equities represents a search for returns that can make up for low, or even negative, yields in developed market investments. The new cash comes at an interesting time for the region, though. Economists expect Latin America to post strong economic growth figures in 2017, ending a two-year recession.

So is the region reaching an inflection point in the economic cycle, and already benefitting from improved prospects? Or are the new investments simply a short-term boost as a result of liquidity in international markets?

Either way, Latin American borrowers have been quick to take advantage. The renewed enthusiasm from investors was on clear display in the region’s bond markets in July. Another gauge will come in September and October, when bond issuers are expected to again test investors’ appetites.

The environment has proved a particular boon to Argentina. Argentine companies and provincial governments have turned aggressively to the debt markets after the sovereign’s  first global debt o er- ing in 15 years. Overall bond sales from all Argentine issuers have jumped from 4% of Latin American issuance in 2015, to 34% in the first eight months of 2016.

Political developments are also feeding a more positive perception of the region’s economic prospects. Brazilian assets have rallied as investors are encouraged by the possibility of more market-friendly policies under Michel Temer. The same has been true in Argentina, where President Mauricio Macri, a former businessman, is implementing pro-market overhauls in a bid to turnaround the economy.

Yet risks persist.

A fundamental concern for many in the region is the rise of protectionism in the developed world, and the long-term efects of a push-back against free trade. Already UK voters have voiced their concerns by voting for Brexit. The next big test comes with the US elections in November. The prospect of Donald Trump in the White House worries many in Latin America.

There are short term risks, also. What impact will a possible increase in US interest rates have on flows into emerging markets? And what if Chinese growth destabilizes and sends ripples through global financial markets?

In Brazil, it is still unclear whether Temer will be able to steer the country out of recession. Macri, too, has strug- gled to reignite the Argentine economy. Many investors want to see tangible improvements in both countries before they step up their holdings.

Despite the risks, it seems over-all that investors have changed the lens through which they view Latin America. Even a brief respite from fund outflows and economic gloom might provide the opportunity Latin America needs to get back to stronger economic growth. LF