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The raft of activity data released across Latin America in recent weeks suggests that the region’s economic recovery stalled in Q1. However, there are reasons to expect it to resume over the remainder of this year. … A disappointing Q1, but things should …
11th April 2018
Mexican industrial production returned to growth in February, and the data showed that the sector is continuing to benefit from a jump in construction and utilities output in the aftermath of September’s earthquakes. However, the beleaguered mining sector …
Brazilian inflation dipped again in March but our sense is that policymakers will start to focus less on the incoming inflation data and more on rising political risks and the associated drop in the real when setting policy. Our base case remains that …
10th April 2018
The fall in Mexican inflation in March was broad-based, and we expect it to continue easing over the course of this year. The data support our view – which the markets have now come round to – that the central bank will leave interest rates unchanged …
9th April 2018
The larger-than-expected decline in Chilean inflation, from 2.0% y/y in February to 1.8% y/y in March, is unlikely to convince the central bank to restart its easing cycle. We expect inflation to rise over the rest of this year, and still think the next …
6th April 2018
Colombia’s economic recovery has been held back by weak investment which appears to be a result of the recent slump in the property market. But this property downturn now seems to have passed its trough. As a result, we expect investment growth to …
5th April 2018
The ruling by Brazil’s Supreme Court to imprison left-wing populist Luiz Inácio Lula da Silva (Lula) all but ends his bid for the presidency and throws the election race wide open. While markets are likely to welcome the news when they open later today, …
Mexican presidential candidate Andrés Manuel López Obrador’s (AMLO’s) goal to stop importing refined oil within three years might be a vote winner, but the large investment into domestic refining needed to achieve this would put pressure on the fiscal …
3rd April 2018
February’s weaker-than-expected Brazilian industrial production figure confirmed that the sector made a very weak start to the year and, barring a surge in output in March, industry probably dragged on GDP growth in Q1. … Brazil Industrial Production …
Brazil’s central bank appears to have been spooked by the weakness of the recent inflation data, but we think that the conduct of fiscal policy will ultimately have a much greater bearing on how interest rates are set over the next 12-18 months. … Fiscal …
29th March 2018
Despite the clashes between the US and China on trade, some more hopeful news on Nafta talks this month has supported the Mexican peso and local currency government bonds – particularly at the long end of the curve. However, Mexican equities have taken …
28th March 2018
The escalating rhetoric over trade protectionism has largely bypassed the economies of Latin America. Indeed, the focus on US actions on steel and aluminium, as well as alleged intellectual property abuses by China, has distracted from more hopeful news …
27th March 2018
The further fall in Mexican inflation in the first half of March was broad-based, and we expect it to continue easing over the course of this year. The data support our view – which the markets appear to be coming round to – that policymakers will leave …
22nd March 2018
The resignation of Peruvian president Pedro Pablo Kuczynski (PPK) is likely to be followed by a smooth and swift transition of power to Vice President Martín Vizcarra. And with financial conditions continuing to loosen, the political upheaval is unlikely …
Recently-released Q4 GDP data confirms that economic growth in Argentina softened at the end of last year, and we expect the economy to slow further over the course of 2018 as tighter fiscal policy weighs on domestic demand and a drought depresses …
Colombia’s central bank left its policy rate unchanged at 4.50% last night, but the accompanying statement left the door open for further easing in the near term. Meanwhile, Chile’s central bank kept rates on hold at 2.50% and we expect them to remain …
21st March 2018
The stronger-than-expected increase in Chilean GDP growth in Q4 was driven by a pick-up in domestic demand, and we expect the recovery to continue over the next year or so. Today’s data support our above-consensus forecast for GDP growth of 3.5% for this …
19th March 2018
We expect growth in most countries in Latin America to accelerate over the course of this year as the region’s cyclical recovery gathers pace. Inflation is now bottoming out and in most places it will drift higher over the coming quarters. As a result, …
16th March 2018
Mexican industrial production stagnated in m/m terms in January, but this was partly payback for a strong 1.0% m/m increase in December. The breakdown reveals that the disruption to industry from September’s earthquakes may finally be over. … Mexico …
13th March 2018
Chile’s new president Sebastián Piñera is inheriting an economy with some cyclical momentum and we expect the recovery to continue over the course of this year. That said, growth over his four-year term is likely to average just 3%, which would be well …
12th March 2018
Right and centre-right parties secured the most seats in yesterday’s legislative elections in Colombia, bolstering the chances of an Iván Duque presidency and dealing a blow to left-wing candidates – including the populist, Gustavo Petro. Markets are …
Inflation in Brazil came in as expected in February, but its failure to pick up over the past couple of months gives Copom the green light to lower interest rates again later this month. We now expect a further 25bp reduction in the Selic rate to 6.5%. … …
9th March 2018
The decision by Peru’s central bank to cut interest rates by 25bp, to 2.75%, was accompanied by a statement that left the door open for one more cut in the easing cycle. But the big picture is that attention will quickly shift towards policy tightening, …
We expect recoveries in Colombia, Chile and Peru to continue over the coming years as investment strengthens and consumer spending picks up. There are downside risks to the outlook – namely large foreign currency debts in Chile and Peru, and a lurch to …
8th March 2018
The further drop in Mexican inflation in February was encouraging, and the breakdown contains signs of broad disinflation pressures – core inflation posted its biggest decline in over three years. The central bank is likely to stay hawkish, but our …
We don’t think that the apparent collapse of pension reform in Brazil will have much of a bearing on the economy’s performance over the next 6-12 months. Even so, the current pension system – and by extension Brazil’s fiscal trajectory – is unsustainable. …
7th March 2018
The fall in Brazilian industrial production in January was largely payback for an especially strong outturn in December – we still expect the industrial recovery to continue over the coming quarters. … Brazil Industrial Production …
6th March 2018
We have just returned from a week of meetings with clients and local contacts in Bogotá. In this Update , we summarise four key takeaways from our visit. … Colombia: notes from the …
5th March 2018
The weaker-than-expected increase in Brazilian GDP in Q4 was due in large part to a sizeable drag from net trade. This was partly due to the unwinding of an earlier jump in agricultural exports, but it may also be the first sign that the strength of the …
1st March 2018
Monetary policy cycles across the region are nearing turning points. In most cases this means that easing cycles are drawing to a close and, as markets start to consider the eventual onset of monetary tightening, bond yields at the short end of the curve …
28th February 2018
Political risks are rising across Latin America. In Colombia and Mexico, left-leaning candidates have consolidated their leads in opinion polls ahead of presidential elections later this year, while the political crisis in Peru has sparked back into life …
26th February 2018
Brazilian inflation was unchanged in the first half of February, but we still expect the headline rate to drift up over the course of this year. Our sense is that this should prevent Copom from loosening policy further at its next meeting (21st March). … …
23rd February 2018
The pause in the decline in Mexican headline inflation in the first half of February masks the fact that core inflation posted its biggest decline in over three years. The central bank is likely to stay hawkish, but our central view is that policymakers …
22nd February 2018
We expect inflation in Brazil to drift higher in the coming months, reaching just over 4% y/y by the end of this year. This won’t cause a major headache for policymakers but, despite the dovish tone of this month’s Copom minutes, we think it will be …
16th February 2018
Colombian GDP growth slowed from 2.3% y/y in Q3 to a weaker-than-expected 1.6% y/y in Q4, but we still expect the economy to recover over the course of this year. … Colombia GDP …
15th February 2018
The decision by Argentina’s central bank to pause its easing cycle last night was accompanied by another cautious statement, reinforcing our view that interest rates will be cut by less than most expect this year. … Argentina: interest rates to be cut by …
The volatility in global financial markets in recent weeks has brought concerns about EM external vulnerabilities back into the spotlight. However, with the notable exception of Argentina, economies in Latin America are now better placed to weather either …
9th February 2018
Mexican industrial production returned to growth in December, on the back of a (delayed) rebound in construction activity following September’s earthquakes. However, the impact of the earthquakes is still being felt in the utilities sector. … Mexico …
Peru’s central bank left interest rates unchanged at 3.00% yesterday as expected, but the accompanying statement left the door open for further easing. We think that a further drop in inflation in the next few months will give policymakers the room to …
The sharp fall in Mexican inflation last month is likely to be the start of a downwards trend, and we expect headline inflation to fall back into the central bank’s target range by Q3. The consensus and the market expects interest rates to be raised at …
8th February 2018
The weaker-than-expected increase in Brazilian consumer prices last month, of 2.9% y/y, unchanged from December, reinforces our view that the rise in inflation over the course of this year will be gradual. While Copom signalled the end of the easing cycle …
This report is only available as a PDF. Click to download. … Brazil's industrial recovery remains on track …
1st February 2018
The 1.0% q/q rebound in Mexican GDP in Q4 was larger than expected but needs to be viewed alongside the -0.3% q/q contraction in Q3. While a stronger US economy will provide a prop to growth this year, this will be largely offset by other headwinds …
30th January 2018
While the rest of the global economy experienced a pick-up in growth towards the end of last year, our GDP Tracker suggests that regional growth in Latin America flat-lined at around 2.5% y/y in Q4 – broadly unchanged from the pace of expansion recorded …
29th January 2018
The decision by a Brazilian court to uphold the corruption conviction against former President Lula complicates his plans to run for the presidency this year but it doesn't finish them altogether. The jump in markets that followed today’s decision was …
26th January 2018
It’s been a good start to 2018 for Latin America’s financial markets, with equities outperforming those in developed markets, currencies posting strong gains against the dollar, and bond spreads narrowing. Argentine markets have had a more mixed start to …
25th January 2018
The sharp fall in Mexican inflation in the first half of January is likely to be the start of a downwards trend, and we expect headline inflation to fall back into the central bank’s target range by Q3. In contrast to the markets, we think that the next …
24th January 2018
The modest rise in Brazilian inflation in the first half of January, which was slightly weaker than expectations, is unlikely to alter the thinking of COPOM. Assuming that the real holds up over the next few weeks, policymakers should deliver one final …
23rd January 2018
We expect economic growth in Colombia to accelerate over the course of 2018. Inflation should fall sharply from the start of this year and interest rates are likely to be cut further. We do not anticipate that the presidential election (scheduled for May) …
22nd January 2018
July’s elections and Nafta renegotiations make the uncertainties around the outlook for interest rates in Mexico unusually high. An election upset or the collapse of Nafta could result in interest rates being hiked by as much as 200bp. However, under a …
19th January 2018
