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The 3.8% m/m drop in Brazilian industrial production in August isn’t quite as bad as it seems at first sight. Around two-thirds of the fall was due to a drop in vehicle output, which was affected by a temporary stoppage at the Sao Bernado VW plant. … …
4th October 2016
The slight increase in Brazil’s headline manufacturing PMI in September was encouraging, but a fall in the new export orders component could be an early sign that the rebound in the real over the past six months is taking its toll on external demand. …
3rd October 2016
Colombian voters’ rejection of the government’s peace deal with the FARC rebel group is unlikely to signal an immediate return to violence. And, while it is a significant blow to the economy’s medium-term prospects, the deal was never likely to radically …
Chilean activity data for August were mixed, but on balance they reinforce our view that a large part of Q2’s weakness was temporary. The early signs are that GDP growth picked up from 1.5% y/y in Q2 to around 1.8% y/y in Q3. … Chile Retail Sales, Ind. …
30th September 2016
The 50bp hike in Mexican interest rates (to 4.75%) at Thursday’s meeting was aimed squarely at supporting the peso. We expect another half-point increase at December’s meeting, taking rates to 5.25%. … Mexico raises rates to shore up the peso, further …
29th September 2016
The depth of Brazil’s recession has been blamed on everything from lower global commodity prices and tightening domestic credit conditions to poor infrastructure and excessive red tape. But this tendency to blame everything muddies the waters and makes it …
The sharp drop in the Mexican peso against the dollar this month, driven partly by Donald Trump’s surge in the US election polls, has increased the chances of an interest rate hike at Thursday’s MPC meeting. The markets are now pricing in a 50bp hike but …
28th September 2016
Donald Trump’s performance in last night’s first US presidential election debate doesn’t appear to have done himself any favours, but his election in November is still a real possibility. This would have significant repercussions for Mexico’s economy, …
27th September 2016
The bigger-than-expected drop in Argentine GDP in Q2 was alarming, but it was due largely to a slump in exports, which should be temporary. The pace of contraction in domestic demand eased and the early signs from our timelier Activity Indicator are that …
23rd September 2016
The rise in Mexican inflation in the first half of this month, to 2.9% y/y from 2.7% y/y over August as a whole, alongside the sharp drop in the peso over the past couple of weeks, means that there is a good chance of a 50bp interest rate hike (to 4.75%) …
22nd September 2016
Data to mid-September provide the first signs that Brazilian food inflation – which has been a source of recent concern for the central bank – is starting to ease. But while that could put an interest rate cut at October’s COPOM meeting in play, we …
The past month has seen governments across Latin America announce belt-tightening measures for 2017 as part of their continued efforts to repair balance sheets following the drop in commodity revenues. Mexico has unveiled another sizeable fiscal squeeze …
21st September 2016
Food inflation should ease over the coming months in Brazil and Colombia, which will help to bring down the headline inflation rates in both countries. By contrast, in Mexico, we expect the lagged impact of the peso’s recent falls to push food (as well as …
The mild pick-up in Peruvian economic activity growth in July was driven by a rebound in the country’s notoriously volatile fishing sector. Nonetheless, we expect growth in the rest of the economy to also strengthen over the remainder of Q3. … Peru …
15th September 2016
Brazil’s economy is bottoming out and, while the recovery will be slow going, our 2017 GDP forecast is a bit above consensus. Inflation should ease and, although COPOM will move gradually in the first instance, interest rates could fall to as low as …
An imminent restructuring of the short term dollar debt of Venezuela’s state-owned oil company, PDVSA, means that the severely cash-strapped government should avoid default over the next 12 months. However, with similarly large FX debt repayments falling …
14th September 2016
Q2 GDP data released across Latin America over the past month revealed that the mining sector was a key drag on growth in a number of economies. This looks set to continue as the lagged impact of lower commodity prices continues to weigh on mining …
13th September 2016
The 1.0% y/y drop in Mexican industrial production in July will grab the headlines, but this figure was distorted by working day effects. And the fact that output rose in seasonally-adjusted m/m terms for the third consecutive month suggests that the …
9th September 2016
August’s inflation data are not going to provide any reassurance to Brazilian policymakers that now is the time to begin lowering interest rates. The headline inflation rate rose to a three-month high, led by a further increase in food and transport …
Substantial cuts to government spending announced by Mexico’s new finance minister José Meade in the 2017 budget reinforce our view that GDP growth will be weaker than the consensus expects next year. The cuts fall unevenly on state-owned oil company …
The weaker-than-expected 2.7% y/y increase in Mexican consumer prices in August, coming alongside further government spending cuts expected to be announced in the 2017 budget later today, strengthens the case for interest rates to remain unchanged this …
8th September 2016
The sharp drop in Chilean inflation in August takes it firmly back within the central bank’s target range and reinforces our view that interest rates are likely to remain on hold for a prolonged period. … Chile Consumer Prices …
There is little doubt that the finances of Brazil’s State governments are in dire straits, but there is some confusion as to how this relates to the wider fiscal position. The key point is that the State’s finances are already captured in the broader …
6th September 2016
The fall in Brazil’s manufacturing PMI in August is disappointing, particularly coming on the back of consecutive increases in the previous two months. However, the decline was relatively modest and we don’t see this as a sign that the nascent …
1st September 2016
The bigger-than-expected 0.6% q/q drop in Brazil Q2 GDP was caused by another large fall in consumer spending. An improvement in investment should ensure that the economy returns to growth over the second half of this year but with consumers likely to …
31st August 2016
The vote by Brazil’s Senate to formally remove President Rousseff from office was a foregone conclusion and is unlikely to have a major impact on markets. Attention will now shift to the passage of fiscal reforms under new president, Michel Temer. The …
Currencies in Latin America have edged down against the dollar since Fed Chair Janet Yellen left the door open to a hike in US interest rates this year in her Jackson Hole speech, but the moves have been small – most currencies are still up against the …
30th August 2016
July’s activity data were slightly better than the dire outturns in May and June, but,on balance, they still suggest the economy remained weak at the start of Q3. … Chile Retail Sales, Ind. Prod. & Copper Prod. …
The continuing slump in mining output pulled annual growth in Colombia down to just 2.0% y/y in Q2. We expect it to fall further over the second half of the year. … Colombia GDP …
29th August 2016
Food inflation has risen further in several economies in Latin America over the past month. The increase has been especially sharp in Brazil and Colombia, but food inflation has also edged up in Chile. The subsequent upward pressure on headline CPI …
25th August 2016
According to media reports a final peace deal between the Colombian government and the FARC is likely to be announced later today at 6pm local time. This will be an historic milestone and should provide a boost to the economy's medium-term outlook. …
24th August 2016
The further rise in Mexican inflation in the first half of this month, to 2.8% y/y from 2.7% y/y over July as a whole, means that the headline rate is on course to breach the central bank’s 3% target by year-end. Against this backdrop, we remain …
Brazil’s mid-month inflation data have tended to overestimate inflation over the full month recently but even so the latest rise, from 8.9% y/y to 9.0% y/y in mid-August, is likely to cause some alarm at the central bank. The likely timing of the first …
The slowdown in Peruvian GDP growth in Q2 was due to a weakening of domestic demand. But, with the new government intent on loosening fiscal policy to stimulate the economy, we doubt the slowdown will persist. … Peru GDP …
22nd August 2016
The good news is that the final estimate of Mexican Q2 GDP showed that the economy contracted by less than previously thought. The bad news is that downward revisions to growth in the previous two quarters mean that the economy was already on a weaker …
The downturn in Latin America is starting to bottom out and growth should return as we enter 2017. The region’s largest economy – Brazil – is turning the corner and our growth forecasts for the next year are a bit above consensus. Likewise, we expect …
The quarterly contraction in Chilean GDP in Q2 is a disappointing sign that the economy remains fragile. But we don’t expect the weakness to persist and revisions to past data mean that the economy is in better shape than we previously thought. … Chile …
18th August 2016
The further narrowing of Brazil’s current account deficit in June has significantly reduced the vulnerability of the country’s financial markets to external shocks. Elsewhere, however, there is still work to do. In particular, balance of payments …
16th August 2016
The slowdown in Peruvian economic activity in June suggests that GDP growth eased to around 3.6% y/y in Q2, from 4.4% y/y in Q1. Nonetheless, this largely reflects weakness in volatile primary sectors that is unlikely to persist and we expect growth to …
15th August 2016
Having left interest rates unchanged last night, the Chilean and Peruvian central banks both removed the reference to a tightening bias in their accompanying statements. However, with inflation likely to remain higher than policymakers expect over the …
12th August 2016
Given the extent of its rally over the past couple of months it’s difficult to make the case that the Brazilian real will now strengthen much further from here. But by the same token, we think there is a reasonable chance that the currency will hold on to …
11th August 2016
Mexico’s manufacturing and construction sectors posted strong m/m gains in June, but a big drag from mining means that overall industrial production only rose by a modest 0.1% m/m. … Mexico Industrial Production …
This report is only available as a PDF. Click to download. … Brazil Consumer Prices (Jul.) …
10th August 2016
The increase in Mexican inflation in July, to 2.7% y/y from 2.5% y/y in June, is unlikely to prompt the central bank to raise interest rates again at Thursday’s MPC meeting. But with inflation likely to breach the central bank’s target over the coming …
9th August 2016
The fall in Chilean inflation in July, coming on the back of a recent weakening in the economy, means that interest rate hikes this year are now looking unlikely. … Chile Consumer Prices …
8th August 2016
Our latest Banking Heat Map shows that Latin America’s credit bubbles are gradually deflating and so far this does not appear to have triggered widespread problems in the region’s banking sectors. Non-performing loans have edged up, particularly in …
4th August 2016
The strong increase in Brazilian industrial production in June was encouraging and, coming on the back of rises in output in both April and May, it looks like the sector added to q/q GDP growth for the first time since Q1 2014. … Brazil Industrial …
2nd August 2016
The jump in Brazil’s manufacturing PMI in July adds to the evidence that the economy has finally begun to turn the corner. Meanwhile, the fall in Mexico’s PMI suggests that the slowdown in the manufacturing sector may have continued in Q3. … Brazil & …
1st August 2016
Despite hopes to the contrary, the Rio Games are unlikely to provide much of a boost to Brazil’s economy. We expect the country’s recession to ease further over the coming quarters, but this has little to do with any boost to activity from the Olympics. … …
The fall in Mexican GDP in Q2 is partly payback for a strong Q1 but it also reflects the continuing drag on Mexican industry from manufacturing weakness in the US. With policy tightening now set to weigh on domestic demand, we expect growth to remain …
29th July 2016
