Filtered by Subscriptions: Latin America Economics Use setting Latin America Economics
The cyclical forces driving Brazil’s economic recovery are likely to strengthen over the next 6-12 months and our GDP forecast for 2018 remains above the consensus. Our bigger concern lies around elections at the end of this year and the potential for a …
17th January 2018
The admission by World Bank Chief Economist Paul Romer that the drop in Chile’s ranking in its annual Doing Business survey in recent years is due almost entirely to changes in how the survey is constructed, rather than a fundamental deterioration in the …
15th January 2018
Peru’s central bank cut its policy interest rate last night by 25bp to 3.00% and, while the statement didn’t give much away regarding future moves, we still think there’s room for another 25bp cut in the policy rate (to 2.75%) in this cycle. … Peru’s …
12th January 2018
Concerns over the fate of Nafta have caused more wobbles in Mexican markets over the past day, but the economic implications are less straightforward than much of the commentary suggests. While any move by the US to pull out of Nafta would cause a market …
11th January 2018
The rise in Brazilian inflation to 3.0% y/y last month leaves it right at the lower bound of the central bank’s 4.5±1.5% target range, which should provide room for a further 25bp cut in the Selic interest rate at the next Copom meeting in February. But …
10th January 2018
The rise in Mexican inflation to a fresh 18-year high of 6.8% y/y in December will probably lead to further calls for Banxico to raise rates again at its policy meeting on 9th February. While another hike is possible, with inflation set to fall sharply in …
9th January 2018
Argentina’s president, Mauricio Macri, has wasted little time in kick-starting his reform agenda following October’s mid-term elections, with a range of fiscal measures announced over the past month. These should help to narrow the budget deficit in 2018 …
8th January 2018
The rise in Chilean inflation in the final month of 2017, to 2.3% y/y, was driven largely by an increase in food inflation – core inflation rose only marginally and remained below the central bank’s target range. As such, while we acknowledge that the …
November’s 0.2% m/m rise in Brazilian industrial production was the third consecutive monthly expansion, and the latest survey data indicate that conditions in the sector should continue to improve over the coming months. … Brazil Industrial Production …
5th January 2018
We wouldn’t put much weight on the dip in Mexico’s business surveys in December since they have become a less reliable indicator of shifts in economic conditions over the past year. Indeed, the hard activity data that are so far available suggest that the …
3rd January 2018
2017 has been another strong year for asset markets in Latin America but there are already signs that 2018 will be more challenging. … A strong 2017 – but 2018 likely to be more …
19th December 2017
The vote due later this week by Peru’s congress on whether to impeach President Pedro Pablo Kuczynski seems likely to pass. If removed, Vice President Martin Vizcarra would take over and, while a significant change in fiscal policy is unlikely, the …
Sebastián Piñera won the second round of Chile’s presidential election, but difficulties in Congress may make it hard to implement parts of his market-friendly reform agenda, including cuts to the corporate tax rate. This won’t prevent a rally in the …
18th December 2017
Central banks in Chile and Peru left interest rates unchanged last night, but both accompanying statements left the door open for further easing. With inflation rising in Chile, the window for cuts is closing, but as things stand we continue to expect …
15th December 2017
The latest data confirm that inflation in Latin America has bottomed out. Having hit a seven-year low of 3.6% y/y in September, our measure of regional inflation edged up to 3.9% y/y in November. This rise has been driven by stronger price pressures in …
13th December 2017
Mexican industrial production contracted for a second consecutive month in October, but this was due largely to a drop in utilities output, which reflects lingering disruption from September’s earthquakes. We still expect industrial production to return …
12th December 2017
The rise in Brazilian inflation to 2.8% y/y in November, from 2.7% y/y in October, was in line with our forecast but a bit smaller than the consensus had expected (2.9% y/y). Either way, none of this will have much bearing on decisions by Copom over the …
8th December 2017
Mexico’s presidential election race is starting to take shape, with Finance Minister José Antonio Meade this month stepping down from his post in order to run on the ticket of the ruling PRI party. While the other main parties in Mexico have yet to …
7th December 2017
November’s inflation data from Mexico, which showed a second consecutive monthly rise in the headline rate, has strengthened the case for further monetary tightening. We now expect policymakers to raise interest rates by 25bp (to 7.25%) at Alejandro Díaz …
The 0.2% m/m gain in Brazilian industrial production in October suggests that the sector started Q4 on a decent footing, and the latest survey data indicate that conditions in the sector should continue to improve over the coming months. … Brazil …
5th December 2017
The resilience of foreign direct investment (FDI) flows to Brazil has been held up as one of the few good news stories of recent years. The reality, however, is far more complicated. While FDI inflows have remained relatively stable, this is not a sign …
4th December 2017
The meagre 0.1% q/q increase in Brazil GDP in Q3 is not as bad as it looks at first sight. The big hit came from a contraction in agricultural production, which is volatile from quarter to quarter, with other sectors posting stronger growth. … Brazil GDP …
1st December 2017
The collapse in Chile’s equity market following a smaller-than-expected victory for business-friendly candidate Sebastián Piñera in the first round of this month’s presidential election has not been matched by similar falls in other asset classes in the …
29th November 2017
Alejandro Diaz de León, who has been named as the next Governor of the Central Bank of Mexico, is very much a continuity appointment that is unlikely to have a major impact on either financial markets or the immediate direction of monetary policy. …
Monetary policy easing cycles across Latin America are getting close to an end, but the evidence of the past month suggests that central banks think they still have a bit more work to do. Policymakers in Colombia and Peru surprised the markets this month …
The unexpected rise in Mexican inflation in the first half of November has increased the chances that the central bank will restart its tightening cycle in the next few months. However, we still think that the next move in interest rates will be down. … …
23rd November 2017
The further increase in Brazilian inflation in the first half of November, which was in line with expectations, is unlikely to alter the thinking of COPOM, and we continue to expect a 50bp cut in the Selic interest rate (to 7.00%) at its next meeting on …
We expect economic growth in most countries in Latin America to accelerate further in 2018. Of the region’s major economies, we anticipate a pick-up in growth next year in Brazil, Mexico, Colombia, Chile and Peru. Argentina is the only major economy where …
22nd November 2017
The pick-up in Peruvian GDP growth in Q3 was due entirely to a surge in domestic demand, with net trade dragging on growth. While we expect the economic recovery to continue over the coming quarters, it is likely to be weaker than most analysts expect. … …
21st November 2017
GDP growth in Chile picked up strongly in Q3 and we expect the recovery to continue over the next year or so. The outcome of the elections is unlikely to have a major bearing on the economic outlook. … Chile GDP & Current Account …
20th November 2017
Centre-right ex-president Sebastián Piñera won yesterday’s election in Chile but by a smaller margin than expected and will now face Alejandro Guillier in a second-round run-off on 17th December. While our base case remains that Mr. Piñera will prevail, a …
The narrowing in Brazil’s current account deficit over the past couple of years has been driven almost entirely by a recession-induced collapse in imports. As a result, the deficit is likely to widen once again as the economy recovers. This supports our …
17th November 2017
Colombian GDP growth picked up from 1.2% y/y in Q2 to 2.0% y/y in Q3, and we expect the economy to continue to recover in 2018 as oil output returns to growth and the drag from fiscal austerity eases. … Colombia GDP …
15th November 2017
The rise in Brazilian inflation from 2.5% y/y in September to 2.7% y/y in October, is likely to be the start of a gradual upwards trend. Nevertheless, we expect inflation to remain below the central bank’s target over the next year. … Brazil Consumer …
10th November 2017
The decision by Peru’s central bank to cut its policy interest rate – by 25bp to 3.25% – caught most by surprise but was in line with our forecast, and we expect further easing over the coming months. With inflation set to fall sharply, our forecast is …
With Venezuela’s state-owned oil company having reportedly failed to make a principal payment on a bond that has now matured, credit default swaps are likely to be triggered on Friday. This is sure to grab the headlines, but we are still a few steps away …
9th November 2017
The pick-up in Mexican inflation last month appears to be due in large part to temporary factors relating to September’s earthquakes. Nevertheless, the data strengthen the case for delaying interest rate cuts until the second half of next year. …
The stronger-than-expected pick-up in Chilean inflation in October is likely to ease fears among the central bank’s Board that below-target inflation is becoming entrenched. Even so, with inflation likely to remain below target over the next 6-9 months, …
8th November 2017
The decision by Argentina’s central bank to follow up last month’s surprise interest rate hike with another increase last night reinforces the view that policymakers are getting tough on inflation. We expect another 50bp hike (to 29.25%) in the coming …
As markets digest conflicting statements by Venezuelan policymakers about their plans for debt servicing, one point to emphasise is that both PDVSA and the government could fall into default by the end of the week unless they settle recently missed coupon …
6th November 2017
The announcement by President Maduro that Venezuela’s government plans to restructure its external debt essentially amounts to admitting that it will default in the coming weeks. While the exact approach remains unclear, the one certainty at the moment is …
3rd November 2017
The planned changes to the way that Brazil’s state development bank, BNDES, will set interest rates on its loans have passed under the radar but the macroeconomic effects could be significant. We estimate that, all other things being equal, the reforms …
2nd November 2017
The return to growth of Brazilian industrial production in September was due entirely to a rebound in intermediate goods production, which was payback for a collapse in August. Even so, it looks like the industrial sector made a solid contribution to GDP …
1st November 2017
The 0.2% q/q fall in Mexican GDP in Q3 was weaker than expected but the data are provisional and are perhaps more likely than usual to be revised given the disruption caused by the twin earthquakes that struck in September. … Mexico GDP (Q3, …
31st October 2017
Most currencies in Latin America have weakened against the dollar over the past month, but the Brazilian real and Mexican peso have suffered particularly large falls as the political mood in both countries has soured. The peso will continue to ebb and …
30th October 2017
Financial markets in Brazil have come under pressure over the past week as a split in President Temer’s ruling coalition has cast doubt over important parts of his reform agenda. The trigger for the latest sell-off has been a fresh vote in the lower house …
27th October 2017
The performance of President Macri’s Cambiemos coalition in last weekend’s legislative elections has given a boost to reform hopes, but we can’t escape the feeling that investors are glossing over the steady deterioration in Argentina’s balance sheet. …
26th October 2017
The decision by Argentina’s central bank to hike its policy interest rate, when most analysts had been expecting the next move to be a cut, is an encouraging sign that policymakers are serious about bringing inflation down. With balance sheet …
25th October 2017
Data showing that Mexican inflation was unchanged in the first half of October compared to September as a whole, combined with the recent deprecation of the peso against the dollar, mean that policymakers will continue to strike a cautious tone in regards …
24th October 2017
The strong showing by President Macri’s Cambiemos coalition in yesterday’s legislative elections is likely to give a boost to local financial markets when they open later today. However, attention will now shift to whether the president can kick-start his …
23rd October 2017
