Latin America Economics Update Does Brazil’s inverted yield curve point to a recession? Brazil’s inverted yield curve has raised concerns that the economy may be on the brink of a recession, but it doesn’t have a particularly good track record as a leading indicator for economic... 4th November 2021 · 3 mins read
Latin America Economics Update A closer look at the latest surveys The latest survey data suggest that GDP growth held up relatively well in Brazil and picked up slightly in Mexico in Q4. In the meantime, Chile’s red-hot recovery is continuing which will keep the... 3rd November 2021 · 2 mins read
Latin America Economics Update Tighter financial conditions to hold back recoveries Financial conditions in Latin America have tightened sharply this year, most notably in Brazil and Chile, on the back of aggressive monetary tightening and growing political and/or fiscal risks. With... 28th October 2021 · 2 mins read
Latin America Economics Update Brazil: fiscal risks to push Selic rate into double digits The Brazilian central bank’s decision to up the pace of tightening to a 150bp rate hike (which took the Selic rate to 7.75%) was a clear response to concerns about a looser fiscal stance. With fiscal... 28th October 2021 · 3 mins read
Latin America Economics Update Brazil: signs of stagflation The multitude of supply shocks hitting Brazil’s economy are likely to keep inflation at 7-10% well into next year and cause the pace of recovery to slow to a crawl in the next few quarters. Overall... 14th October 2021 · 4 mins read
Latin America Economics Update Chile: front-loaded tightening cycle has further to run The surprisingly large 125bp rate hike delivered by Chile’s central bank yesterday, to 2.75%, suggests that it will continue to front-load its tightening cycle to clamp down on high inflation. We now... 14th October 2021 · 3 mins read
Latin America Economics Update Lessons from Brazil’s 2001/02 energy crisis The threat of energy shortages looms over Brazil once again. The country’s experience with electricity rationing in 2001/02 offers a useful guide about how the situation may pan out. We estimate that... 7th October 2021 · 4 mins read
Latin America Economics Update Five reasons why Mexico’s recovery will disappoint There are five key headwinds to Mexico’s economy, including high inflation and shortages in the auto sector, which suggest to us that the recovery will disappoint expectations from here. We now... 5th October 2021 · 4 mins read
Latin America Economics Update Brazil: Copom keeping its foot on the brakes The statement from yesterday’s Brazilian central bank meeting, at which the Selic rate was raised by 100bp (to 6.25%), made clear that Copom is on the warpath to stop inflation expectations rising... 23rd September 2021 · 3 mins read
Latin America Economics Update Is high inflation here to stay in Latin America? Following a surge in inflation across the region this year, we think that headline rates are at, or close to, a peak in major Latin American economies. But strong underlying price pressures will... 15th September 2021 · 4 mins read
Latin America Economics Update Peru: BCRP stepping up pace of tightening Yesterday’s larger 50bp rate hike, to 1.00%, delivered by Peru’s central bank (BCRP) suggests it is becoming increasingly concerned about the inflation outlook. With inflation set to stay above the 1... 10th September 2021 · 3 mins read
Latin America Economics Update Brazil’s drought adds to inflation and fiscal risks Brazil’s drought is getting worse and the impact on hydropower production and electricity tariffs will result in higher inflation than we’d previously thought. Fiscal risks could also intensify if the... 1st September 2021 · 3 mins read
Latin America Economics Update Chile’s central bank stepping on the brakes The surprise 75bp interest rate hike by Chile’s central bank late on Tuesday (which took the policy rate to 1.50%) underscores policymakers’ concerns about the inflation outlook. Our forecasts for the... 1st September 2021 · 3 mins read
Latin America Economics Update Brazil: could a savings drawdown lift the recovery? We estimate that Brazilian households have ‘excess’ savings worth around 6% of GDP resulting from the pandemic. These should help to cushion consumer spending in the face of headwinds caused by rising... 26th August 2021 · 3 mins read
Latin America Economics Colombia: BanRep to hike despite Q2 GDP drop The sharper-than-expected 2.4% q/q fall in Colombia’s GDP in Q2 was largely due to protest-related disruption in May and masked a strong rebound in output at the end of the quarter. The economic... 18th August 2021 · 3 mins read
Latin America Economics Update Banxico’s tightening cycle progressing slowly Mexico’s central bank hiked interest rates by 25bp, to 4.50%, yesterday but the split vote suggests that the tightening cycle will continue to proceed slowly despite the growing inflation risks. This... 13th August 2021 · 3 mins read