Filtered by Subscriptions: Latin America Economics Use setting Latin America Economics
The decision by populist and anti-IMF former president, Cristina Fernández de Kirchner, to run for vice president in October’s election (with a more moderate Peronist at the top of the ticket) has reduced the odds of a disorderly post-election default. …
20th May 2019
Data released this week all-but-confirm that Brazilian GDP contracted in Q1 and it looks touch and go as to whether the economy entered a technical recession in Q2. Another fall in output this quarter would probably convince Copom to cut the Selic …
17th May 2019
The pick-up in Colombian GDP growth from 2.7% y/y in Q4 to 2.8% y/y in Q1 was driven in large part by robust domestic demand. While the consensus expects momentum to pick up this year, we expect growth to slow. … Colombia GDP (Q1 …
15th May 2019
Brazilian inflation has probably now reached a peak and the headline rate should fall below the central bank’s target in the coming months. With core inflation still extremely soft, the central bank is likely to keep the Selic rate unchanged at its …
14th May 2019
Data released this week confirming a further rise in Mexican inflation last month were eye-catching, but it looks like Easter effects were partly to blame. Elsewhere, dovish statements accompanying interest rate decisions in Chile and Peru this week …
10th May 2019
The much larger-than-expected contraction in Mexican industrial production in March, of 1.3% m/m, will diminish hopes of an upwards revision to the dire provisional Q1 GDP figure. With the economy clearly struggling, interest rate cuts will soon come onto …
The further rise in Brazilian inflation, to 4.9% y/y in April, is unlikely to trouble Copom. The increase was driven by food, energy and administered prices; core inflation still looks soft. The headline rate has probably now peaked and we expect it to …
The rise in Mexican inflation last month, to 4.4% y/y, is likely to mark the peak and we expect the headline rate to decline over the next few months. This, combined with weak economic activity, will pave the way for more interest rate cuts than the …
9th May 2019
Opposition to Brazil’s pension reform has, so far, been limited to fairly minor components of the bill. But it will face more substantial resistance in the coming months. Ultimately, our sense is that the savings anticipated by most market participants …
Copom’s statement from last night’s meeting highlighted that policymakers are not troubled at all by the recent jump in inflation and, rightly in our view, see it as temporary. If anything, they are more concerned about the weakness of the activity data. …
The collapse of Venezuela’s economy has placed strains on Colombia’s social welfare system but, if anything, it is actually likely to have a small positive impact on Colombian GDP growth. … Colombia: judging the impact of the Venezuelan …
7th May 2019
The decision by Argentina’s central bank to scrap the peso’s trading band and signal more FX intervention has shored up the currency this week but, sooner rather than later, markets are likely to test policymakers’ resistance to peso depreciation. We …
3rd May 2019
The larger-than-expected contraction in Brazilian industrial production in March, of 1.3% m/m, means that the Q1 GDP data are likely to be ugly. We’ll firm up our forecast when more data are released but, as things stand it looks like the economy may have …
The growing possibility of a lurch to the left in Argentina’s presidential election in October has rekindled sovereign default fears. While the government’s FX debt repayment schedule in the immediate aftermath of the election looks manageable, it becomes …
1st May 2019
Preliminary data showing a surprise 0.2% q/q contraction in Mexican GDP in Q1 made for ugly reading, and the risks to our above-consensus growth forecast for this year now lie firmly to the downside. That said, the dire data strengthen our case that the …
30th April 2019
The past month has seen political risks in key economies start to crystallise. The rout in Argentine markets, triggered by concerns about the dwindling re-election prospects of President Macri, has grabbed the headlines. But political risks are building …
29th April 2019
The broad-based sell-off in Argentine assets over the past week or so, triggered by growing political risks, has resulted in a sharp tightening of financial conditions, which will weigh on economic growth in the coming quarters. More worryingly, there is …
Argentine markets have stabilised today but, by our estimates, the aggressive sell-off earlier this week has resulted in the political risk premium on dollar bonds widening to around 200bp. We think that this premium is likely to persist, and may even …
26th April 2019
Argentine policymakers are likely to have been spooked by the rout in local markets in recent days, and the experience of the past few weeks suggests that they will be tempted to respond with more unorthodox measures. We think these would end up doing …
25th April 2019
The further rise in Brazilian inflation, to 4.7% y/y in the first half of April, was driven almost entirely by stronger food and fuel inflation. There are signs in the breakdown that inflation has now peaked. … Brazil IPCA-15 …
The larger-than-expected rise in Mexican headline inflation in the first half of this month, to 4.4% y/y, coming alongside a jump in core inflation, will temper talk of monetary easing in the coming months. But we still think that inflation will fall in …
24th April 2019
Brazilian President Jair Bolsonaro this week has shown further signs that he is less committed to market orthodoxy than many had hoped. For now, it seems that parts of the administration are working hard to keep investors on board. But it wouldn’t take …
18th April 2019
The decision by Argentina’s central bank to limit the extent to which the nominal exchange rate will be allowed to weaken this year raises the risk that the peso becomes overvalued. Meanwhile, the announcement of price controls expected later today adds …
17th April 2019
Jair Bolsonaro’s government has put forward an impressive set of plans to reform Brazil’s economy, but souring relations with congress reinforce our view that these will be diluted. Perhaps of more immediate concern, the economy has stalled and government …
12th April 2019
The decent 0.3% m/m rise in Mexican industrial production in February suggests that the sector made a small positive contribution to growth in Q1, having exerted a drag of about 0.3%-pts in Q4. This supports our view that the Mexican economy will post …
11th April 2019
The Argentine central bank’s pledges to keep monetary policy tighter for longer have helped to stave off a run on the currency in recent weeks. But by keeping the economy weak ahead of October’s election, the measures will weigh on President Macri’s …
10th April 2019
The larger-than-expected increase in Brazilian inflation, to 4.6%y/y in March, was driven by a rise in food and petrol inflation, both of which should prove temporary. Copom is likely to look through this and we continue to expect the Selic rate to remain …
The small rise in Mexican inflation last month, to 4.0% y/y, is likely to keep Banxico hawkish in the very near term. But the headline rate should resume its decline in H2, paving the way for interest rate cuts. … Mexico Consumer Prices …
9th April 2019
Chilean inflation picked up from 1.7% y/y in February to 2.0% y/y in March, but we still think that the central bank is unlikely to restart its tightening cycle until 2021. … Chile Consumer Prices …
8th April 2019
President Trump’s renewed threats to a) place a 25% tariff on vehicle imports from Mexico and b) close the southern border would, if acted on, deal a substantial hit to Mexican GDP. But we think they probably largely reflect pre-election bluster. And with …
5th April 2019
GDP growth in Latin America probably reached a trough in Q1, but the pace of recovery will be slower than most expect. The prices of most of the region’s commodity exports will either fall or remain low. At the same time, global growth is set to stay …
4th April 2019
The best that Mexico’s state-owned oil company, Pemex, can hope for in the coming years is a slower pace of decline in crude production. Many of its shallow oil fields are maturing and the government seems more intent on ploughing money into a new …
2nd April 2019
The 0.7% m/m rise in Brazilian industrial production in February confirms that industry is recovering from a very weak period that was affected by one-off drags in the auto and petroleum refining sectors. But the pace of economic growth is still extremely …
The statement accompanying the Chilean central bank’s decision to hold its policy rate at 3.00% on Friday night signalled that rates are likely to stay on hold for longer than they had previously anticipated. Our forecast for rates to remain unchanged …
1st April 2019
Expectations for reforms from the Bolsonaro government came crashing back to earth this week and there is now a risk premium on the Brazilian real and dollar bonds that could increase further unless pension reform gets back on track. In contrast, the …
29th March 2019
Part of the recent weakness in Brazilian industry can be pinned on softer external demand, particularly from Argentina. But the sector has also been affected by temporary factors which have probably now started to unwind. So the incoming data should show …
28th March 2019
The rise in Brazilian inflation to 4.2% y/y in the middle of March is unlikely to trouble Copom. Inflation should begin to decline again in Q2. And we still expect the Selic rate to remain unchanged at its current historic low of 6.50% both this year and …
26th March 2019
Robust GDP growth in the Andes over the past year or so has been a rare piece of good news in Latin America, but in Chile and Colombia’s case, this has come alongside growing external vulnerabilities. Recently-released figures show that current account …
25th March 2019
Swings in Brazil’s equity and currency markets this week suggest that investors are coming to terms with the idea that pension reform will be diluted. But there are much greater concerns about disputes between the Bolsonaro administration and his fragile …
22nd March 2019
Mexican inflation remained above target, at 4.0% y/y, in the first half of March and will probably stay around this rate in Q2. But we expect that the headline rate will decline during the second half of the year, paving the way for monetary loosening. We …
The wording of last night’s Brazilian monetary policy statement provides further evidence that the appointment of new governor Roberto Campos Neto won’t cause much of a change to monetary policy. With this in mind, we think the financial market’s current …
21st March 2019
Brazil’s new central bank governor, Roberto Campos Neto, inherits a benign inflation environment and we now think the Selic rate will be left unchanged at its current historic low of 6.5% until at least end-2020. In contrast, the markets are pricing in …
19th March 2019
Colombia’s current account deficit is widening, making the recovery vulnerable to a deterioration in global risk appetite that we expect later this year. The country’s weak external position is likely to put the peso under pressure, push up headline …
18th March 2019
The pick-up in Chilean GDP growth from 2.6% y/y in Q3 to 3.6% y/y in Q4 was driven in large part by stronger domestic demand, but this has also caused the current account deficit to widen rapidly. While the consensus expects a very modest slowdown from …
Measures announced by Argentina’s central bank last night appear to have supported the peso today, but the currency will remain vulnerable to large falls, particularly as October’s presidential election approaches. Meanwhile, signs of discord between …
15th March 2019
The stronger-than-expected expansion in Mexican industrial production in January, of 0.6% m/m, is an early sign that the huge drag the sector exerted on Q4 GDP won’t be repeated in Q1. We still hold an above-consensus view for GDP growth over this year as …
13th March 2019
The much larger-than-expected fall in Brazilian industrial production in January, of 0.8% m/m, suggests that the economy is being buffeted by global headwinds. If anything, the risks to our below-consensus growth forecast of 2.0% this year are starting to …
The slightly higher-than-expected Brazilian inflation figure for February, of 3.9% y/y, was driven by a spike in prices in a few food products which should prove temporary. Copom will probably stick to its recent dovish line when it meets next week. … …
12th March 2019
Venezuela’s oil exports have dropped sharply following the imposition of US sanctions on PDVSA last month, and further falls are likely in the coming months. This will make it increasingly difficult for President Maduro to keep the top brass in the …
11th March 2019
The sharp falls in the Argentine peso and Brazilian real in the second half of the week reflected both worsening global risk appetite and domestic political concerns. A few weeks ago it had felt that we were out on a limb in forecasting chunky falls in …
8th March 2019
