Suggestions this week by Brazil's presidential front runner Lula that state banks will play a bigger role would only aggravate some of the underlying problems in the country’s economy. Elsewhere, the recent GDP figures out of Colombia and Chile show that the two economies went their different ways in Q2, but in both large current account deficits mean demand will have to weaken. Indeed, in Chile’s case, we think the economy will enter recession over the second half of the year.
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