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Peru’s central bank kept interest rates on hold at 4.25% for a tenth consecutive month last night, but with the risks to inflation firmly skewed to the upside, we expect policy tightening to resume next year. … Peru holds interest rates, but hikes likely …
16th December 2016
Latin America’s financial markets have largely shrugged off yesterday’s US interest rate hike, as well as upward revisions to Fed officials’ rate projections – currencies and dollar bonds have made only very small losses and most are still up …
15th December 2016
Peru’s economy weakened sharply in October and, while we don’t think that the slowdown will be sustained, it’s an early sign that GDP growth may weaken in Q4. … Peru Economic Activity …
The small rise in Mexican industrial production in October doesn’t alter the bigger picture that the sector remains the key weak spot in the economy. We expect industry to do little more than stagnate over Q4 as a whole. … Mexico Industrial Production …
12th December 2016
Signs that Brazil’s economy was turning a corner around the middle of this year have been extinguished by a recent run of awful data and – more ominously – renewed political strife. There are still reasons to expect growth to return next year but this …
9th December 2016
The larger-than-expected decline in Brazilian inflation in November, coming on the back of less hawkish communications from policymakers in recent weeks, make it more likely that COPOM will step up the pace of easing at its January meeting. … Brazil …
Mexican inflation rose to 3.3% y/y in November, from 3.1% y/y in October, and it’s unlikely to stop there. We expect the headline rate to climb above the top-end of the central bank’s 2-4% target range by the middle of next year. As such, the central bank …
8th December 2016
After two years of falling output, Latin America’s economy finally looks set to return to growth next year. Brazil and Argentina should exit recessions, while the downturns in Colombia and Chile are likely to bottom out. Investment should start to recover …
7th December 2016
The small uptick in Chilean inflation in November is likely to prove temporary and we expect the headline rate to fall further below the central bank’s target by early next year. Following more disappointing news on the economy, we now expect the central …
The larger-than-expected 1.1% m/m fall in Brazilian industrial production in October provides an early sign that, following the slump in Q3, a strong rebound in output in Q4 is unlikely. … Brazil Industrial Production …
2nd December 2016
Mexico’s manufacturing PMI fell in November following the election of Donald Trump but the decline was very modest and doesn’t point to a renewed downturn in production over the coming months. Elsewhere, Brazil’s PMI nudged down, suggesting that a strong …
1st December 2016
About 0.3%-pts of the 0.8%-pt contraction in Brazil GDP in Q3 can be chalked down to one-off effects stemming from a poor harvest and temporary disruptions to vehicle production. But the big story here remains the persistent weakness in consumer spending. …
30th November 2016
Financial markets in Latin America have stabilised following an initial sell-off in the wake of Donald Trump’s election victory. While we expect dollar-denominated bonds to come under further pressure, we think much of the bad news is now priced in to …
29th November 2016
Chilean activity data for October were slightly worse than expected and suggest that the economy got off to a disappointing start in Q4. They’re probably not enough to convince the central bank to ease policy immediately, but if the data fail to improve …
While the eyes of the world have been focused on the fallout from the US election, domestic political risks have resurfaced in Brazil. The latest controversy surrounds allegations that President Temer intervened to support a government minister in a …
28th November 2016
The sharp slowdown in Colombian GDP growth, to just 1.2% y/y in Q3 from 2.0% y/y in Q2, was due in part to the effects of a truck drivers’ strike. With the dispute having now ended, Q3 may prove to be the bottom of the downturn. However, next year’s …
25th November 2016
Mexican inflation continued to climb in the first half of November, rising to 3.3% y/y from 3.1% y/y over the whole of October. And, following the sharp depreciation of the peso over recent weeks, we now expect it rise above the top-end of the central …
24th November 2016
While many analysts are scrambling to revise down their economic forecasts for Mexico and the rest of Latin America in the wake of Donald Trump’s victory, for now we see little reason to make wholesale revisions. Likewise, while financial markets in the …
22nd November 2016
Donald Trump’s surprise victory in the US election has led to a rash of sizeable downgrades to growth forecasts for Mexico, including several predictions of a recession. But we think the impact over the next couple of years will be less severe than most …
21st November 2016
Peruvian GDP growth rebounded to an impressive 4.4% y/y in Q3, from 3.7% y/y in Q2, as household consumption and export growth accelerated. What’s more, the economy looks set to remain strong over the coming quarters. … Peru GDP …
Chile’s central bank kept interest rates on hold at 3.50% and, while GDP data released this morning showed that economic growth remained sluggish in Q3 at 1.6% y/y, we still think it would take a further weakening of the economy – which seems unlikely – …
18th November 2016
The 50bp increase in Mexican interest rates (to 5.25%) at today’s meeting was aimed at supporting the peso in the aftermath of the US election and it’s clear that further hikes are on the cards. We expect another half-point increase at December’s meeting, …
Peruvian economic activity data showed that, while the economy weakened between August and September, GDP growth over Q3 as a whole probably strengthened to around 4.5% y/y from 3.6% y/y in Q2. … Peru Economic Activity …
15th November 2016
The wholesale renegotiation of NAFTA that Donald Trump talked about on the campaign trail would require approval by Congress and seems unlikely to happen. But President Trump will have broad powers to impose a range of trade restrictions from moderate …
11th November 2016
Despite the drop in the sol in recent days and the rising inflation rate, Peru’s central bank left interest rates on hold at 4.25% once again. Nonetheless, we expect hikes to resume next year and the scale of tightening is likely to take most forecasters …
The rebound in the peso over the last few hours appears to have dissuaded Mexico’s central bank from raising interest rates at a press conference this morning. However, with the situation in markets still uncertain, our sense is that the central bank will …
9th November 2016
The sharp fall in Brazilian inflation in October is likely to be followed up by further declines over the coming months. Accordingly, barring a sustained drop in the real – the currency is down by 2.5% against the dollar in the aftermath of the US …
Chilean inflation surprised on the downside again in October and looks set to fall further over the coming months due to the fading impact of last year’s depreciation of the peso. This is likely to open a window for interest rate cuts, although for now, …
8th November 2016
If Donald Trump prevails in tomorrow’s US presidential election, our sense is that Mexican policymakers’ initial response would be to hike interest rates by 100-200bp at an emergency central bank meeting in an effort to support the peso. This may also be …
7th November 2016
The likely market sell-off in response to a victory for Donald Trump next week could push the Mexican peso to as low as 25/$. What happens to the peso beyond the initial sell-off would depend upon several factors, most notably the degree to which a Trump …
3rd November 2016
The small decline in Mexico’s manufacturing PMI in October suggests that the factory sector remains weak. And, with mining output still falling, industry as a whole is unlikely to be a major source of growth over the coming months. … Mexico Manufacturing …
1st November 2016
The 0.5% m/m increase in Brazilian industrial production in September only partly reversed the steep fall in August and means that the sector still contracted by around 1.0% q/q in Q3 as a whole. The good news is that the temporary headwinds that pulled …
A combination of shutdowns at several large auto plants and a drought-related drop in agricultural exports has set back the recovery in Brazil’s economy. Both headwinds should prove temporary, but our GDP Tracker suggests that the official national …
31st October 2016
Mexico’s economy grew by an impressive 1.0% q/q in Q3, the strongest rate since 2014. However, with growth being driven largely by the services sector and monetary policy set to tighten further, such a rapid pace of growth is unlikely to be sustained. … …
Central banks in several countries in Latin America are turning increasingly dovish. Policymakers in Brazil cut interest rates this month on the back of another drop in inflation and further (gradual) progress by the government on fiscal reforms. The …
Stronger-than-expected Chilean activity data for September suggest that GDP growth picked up to more than 2% y/y in Q3, which would be the strongest rate since the middle of 2015. While this wouldn’t completely rule out the possibility of interest rate …
28th October 2016
The restructuring of the short term dollar debt of Venezuela’s state-owned oil company has reduced the risk of default over the next twelve months, but only at the margin. What’s more, it has added to obligations due beyond 2017. Accordingly, with oil …
27th October 2016
Latin America’s financial markets have performed strongly this month thanks to rising commodity prices, as well as favourable political developments in the cases of Brazil and Mexico. The exception is Colombia, where the rejection of the government’s …
26th October 2016
Colombia’s much-anticipated tax reform bill is impressive and, if passed by Congress, would put the public finances on a more sustainable footing. However, it would create some near-term economic pain for the private sector. In particular, a 3%-pt hike in …
25th October 2016
The increase in Mexican inflation in the first half of this month, to 3.1% y/y from 3.0% y/y over the whole of September, was due largely to a rise in energy prices. While the recent rebound in the peso will have eased concerns at the central bank, the …
24th October 2016
Data to mid-October show that inflation in Brazil is continuing to ease, which should provide room for another cut in interest rates at November’s COPOM meeting. … Brazil IPCA-15 …
21st October 2016
Mexico’s faltering economy probably escaped recession in Q3 – but it’s a close call. Our GDP growth forecast for this year was already below consensus but we are nudging it down from 2.0% to 1.8%. Growth should pick up next year as the drag from mining …
20th October 2016
The decision by Brazil’s COPOM to cut the benchmark Selic interest rate by only 25bp (rather than 50bp), combined with a slightly less dovish accompanying statement than some had expected, reinforces our view that easing over the next 6-9 months will be …
The Argentine government’s recent upward revision to its 2017 budget deficit forecast has added to concerns that President Macri’s reform agenda is already starting to slow after less than a year in office. However, while it’s true that momentum has …
19th October 2016
Chile’s central bank left interest rates on hold at 3.50%, although the MPC appears to be divided over whether to flag rate cuts or not. For now, we expect signs that the economy is recovering keep the balance in favour of leaving policy on hold for a …
The pick-up in Peruvian economic activity in August was encouragingly broad-based and suggests that GDP growth rebounded back above 4% in Q3. … Peru Economic Activity …
14th October 2016
The Peruvian central bank’s decision to keep interest rates on hold at 4.25% didn’t come as a surprise, but we expect a pick-up in inflation next year to trigger more rate hikes than the consensus expects. … Peru: Interest rates to rise by more than most …
The 0.4% m/m drop in Mexican industrial production in August is disappointing coming on the back of three consecutive increases. Nonetheless, it largely reflected another sharp fall in mining output. In contrast, manufacturing production continued to …
12th October 2016
The increase in Mexican inflation in September, to 3.0% y/y from 2.7% y/y in August, means that headline CPI is now at the central bank’s target and leaves it on track to move above target over the coming months. We expect one further 50bp hike interest …
7th October 2016
The bigger-than-expected drop in Brazilian inflation in September should be enough to seal the deal on an interest rate cut at this month’s COPOM meeting. … Brazil & Chile Consumer Prices …
