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Equities in Latin America have outperformed those in the developed and wider emerging world so far this month, despite another dip in the prices of some global commodities. Meanwhile, Venezuela’s foreign currency bonds have rallied following rumours that …
28th July 2016
The downturn in Latin America appears to have bottomed out in the second quarter of this year. Our GDP Tracker suggests that the region’s economy contracted by 1.2% y/y in Q2, compared to 1.5% y/y in Q1. This was due in large part to Brazil, where …
27th July 2016
In contrast to the prevailing view that tight credit conditions have been a constraint on Mexican growth, the debt ratio has actually increased at a reasonably sharp pace over the past five years. This does not yet pose an imminent threat to financial …
25th July 2016
We expect the rise in Mexican inflation in the first half of this month, to 2.7% y/y from 2.5% y/y over June as a whole, to be the start of an upward trend that will ultimately force the central bank to tighten monetary policy further. The MPC is unlikely …
22nd July 2016
The uptick in Brazilian inflation in the first half of this month was modest but it will reinforce the hawkish tone set by last night’s COPOM statement. Our base case is that interest rate cuts will commence in October but it’s possible that policymakers …
21st July 2016
Upside risks to Colombian inflation over the next few months mean that we now expect the central bank to raise interest rates by 25bp this month, to 7.75%, with a further hike in August likely. Nonetheless, the bigger picture is that inflation is close to …
20th July 2016
The rebound in Peruvian economic activity in May leaves the economy on course to expand by around 4% in Q2. That would be weaker than the Q1 outturn, but it would still mean that Peru remained one of the region’s best performers. … Peru Economic Activity …
15th July 2016
The decisions by the Chilean and Peruvian central banks to leave monetary policy unchanged didn’t come as a surprise as, for now, the inflation picture in both economies is improving. But with inflation unlikely to fall as far as policy makers expect, …
The likely signing of a final peace agreement between the Colombian government and the country’s largest insurgent group, the Revolutionary Armed Forces of Colombia (FARC), will be an historic milestone and it should provide a boost to the economy’s …
14th July 2016
The weakening of most Latin American currencies has helped the region’s economies adjust to the terms of trade shock caused by the drop in global commodity prices. But while weaker currencies mean that non-commodity export sectors now look more …
13th July 2016
The weaker-than-expected 0.4% y/y rise in Mexican industrial production growth in May, down sharply from 1.9% y/y in April, confirms that the sector remains the weak spot of the economy. There’s little here to suggest that manufacturers are benefitting …
12th July 2016
The drop in Brazil inflation, from 9.3% in May to 8.9% in June, should be followed by further falls over the coming months. That said, our view remains that the central bank will resist lowering interest rates until Q4 of this year. … Brazil & Chile …
8th July 2016
The modest fall in Mexico’s headline inflation rate in June, to 2.5% y/y from 2.6% y/y in May, hides the fact that core inflation pressures are creeping up. Coupled with continued pressure on the peso, this means further interest rate hikes are still …
7th July 2016
We expect inflation in Brazil to fall back over the next year but, despite a recent repricing, the centralbank may still not cut interest rates as quickly as the markets expect. … Brazil inflation set to fall but interest rate cuts to be …
The decline in Mexico’s manufacturing PMI to almost a three-year low in June confirms that the sector is struggling for momentum, but with other more reliable leading indicators – such as the US ISM manufacturing index – ticking up in June, we doubt …
1st July 2016
The stagnation in Brazilian industrial production in May was disappointing, coming on the back of growth in the two previous months, but the bigger picture is that the underlying trend is improving. What’s more, the rise in the PMI in June supports our …
Argentina’s statistics office has finally released a new GDP series based on a revised methodology and the good news is that it seems to paint a more accurate picture of economic activity on the ground than the old series. The bad news is it shows that …
30th June 2016
Equities and currencies across Latin America tumbled alongside global markets in the immediate aftermath of the UK’s vote to leave the European Union, but have since recovered some (and in a few cases all) of their losses. Moreover, there has been little …
29th June 2016
The UK’s vote to leave the European Union has triggered sharp falls in financial markets in Latin America but the economic fallout for the region should be limited. The UK is a relatively small export market for Latin America and financial ties are …
28th June 2016
Mexico’s fairly soft mid-month inflation reading for June, of 2.6% y/y, taken together with the recent rebound in the peso, has eased some of the pressure on the MPC to tighten monetary policy next week. Nonetheless, with core price pressures building and …
23rd June 2016
The recovery in global oil prices, coupled with a possible restructuring of debt repayments to China will help to ease some of the pressure on Venezuela’s economy but does not alter the bigger picture: the government faces an unpalatable choice between …
Revamped data released by Argentina’s Finance Ministry show that the primary fiscal deficit narrowed significantly in Q1. However, further cuts will be needed to stabilise the public debt ratio and, with next year’s mid-term elections on the horizon, …
17th June 2016
Economic activity growth weakened sharply in Peru at the start of the second-quarter, but we suspect this is largely a temporary blip and growth should rebound in the coming months. … Peru Economic Activity …
15th June 2016
Michel Temer’s first month as interim president of Brazil has been a mix of the good (eye-catching economic reforms) and the bad (three members of government, including the transparency minister, have already been forced to resign due to allegations of …
Pedro Pablo Kuczynski’s (PPK) victory in Peru’s presidential election is likely to mean the continuation of the current government’s market-friendly economic policy. While there is a risk that his party’s weak position in congress will undermine his …
13th June 2016
The 1.9% y/y rebound in Mexican industrial production confirms that last month’s sharp drop was largely due to working day effects. But the underlying picture is that the sector remains the weak spot of the economy. … Mexico Industrial Production …
10th June 2016
The modest rise in Mexican inflation in May, to 2.6% y/y from 2.5% y/y in April, in itself is unlikely to have much of a bearing on the central bank’s rate setting meeting later this month given that it was in line with expectations. But we think the drop …
9th June 2016
Having fallen in each of the past three months, inflation in Brazil was unchanged at 9.3% y/y in May. We suspect that this is a temporary blip rather than the start of a new trend and think inflation will resume its decline over the coming months. …
8th June 2016
Non-performing loans in Brazil will climb higher as the past decade’s debt boom continues to unwind. However, we think the cost of cleaning up the banking system should be manageable, helped in part by the fact that banks are starting from a point where …
7th June 2016
The downturn in Latin America’s economy should bottom out over the second half of this year and economic growth should return as we move into 2017. The recession in the region’s largest economy – Brazil – is likely to ease and a combination of stable …
6th June 2016
The sharp slowdown in Colombian GDP growth in Q1 reinforces our view that the economy is set to slow further than most expect this year. … Colombia GDP …
3rd June 2016
The second (and final) round of Peru’s presidential election, set to take place on Sunday, won’t bring a major shift away from the current government’s fairly market-friendly economic policies. Nonetheless, there are still a number of political risks that …
Brazilian industrial production rose for the second consecutive month in April and, coming on the back of yesterday’s better-than-expected GDP data, adds to signs that economic conditions are starting to stabilise. … Brazil Industrial Production …
2nd June 2016
The drop in Brazil’s manufacturing PMI to a six-year low in May is something of a reality check after better-than-expected first quarter GDP data this morning, but in truth the PMI has been a pretty poor indicator of changes in the recent activity data. …
1st June 2016
The drop in Brazil Q1 GDP was much smaller than had been expected but only because of a jump in government spending. With fiscal policy set to tighten over the second half of the year, this prop to the economy will go. … Brazil GDP …
Currencies across Latin America have been caught up in the EM-wide sell-off in recent weeks, triggered by the US Fed signalling that a June interest rate hike is still on the table. But a combination of domestic factors and external vulnerabilities means …
26th May 2016
Events in Brazil have dominated the past month. The new government under interim president, Michel Temer, has announced a string of market-friendly policies aimed at stabilising the economy, but it remains to be seen whether it will be able to push these …
25th May 2016
Brazil’s Finance Minister, Henrique Meirelles, has unveiled the first part of his planned fiscal adjustment. Our initial take is that the plans are lofty in ambition, but so far lacking in detail. Most of the more important measures will require …
24th May 2016
The fact that Mexican inflation in the first half of this month came in at a weaker-than-expected 2.5% y/y eases some of the pressure on the MPC to tighten monetary policy next month. But if the peso continues to weaken, an interest rate hike next month …
The final estimate of Mexican Q1 GDP growth confirmed that the economy picked up, but by less than previously thought. Looking ahead, we think Q1 may be as good as it gets for Mexico this year, with tighter fiscal and monetary policy set to weigh on …
20th May 2016
The rise in Brazilian inflation in the first half of this month, to 9.6% y/y, from 9.3% y/y over April as a whole, was disappointing given that it followed declines in the previous three months. Today’s data confirm our view that inflation will be slow to …
Argentina’s long-overdue policy tightening – needed to address the country’s entrenched inflation problem – is finally underway, but with the fiscal deficit still large and inflation in excess of 40% y/y, most of the hard work for policymakers is still to …
19th May 2016
The rebound in Chilean GDP growth in Q1 suggests that recent concerns that the economy is heading for a renewed downturn this year were premature. Nonetheless, we doubt growth will accelerate much beyond 2.0%. … Chile GDP & Current Account …
18th May 2016
The Central Bank of Chile’s decision to leave its key policy interest rate unchanged at 3.50% reinforces our view that lingering signs of economic weakness, notably the rising unemployment rate, will mean that further tightening is delayed until the final …
Brazil’s new Finance Minister has unveiled a string of eye-catching market-friendly measures this morning, as part of the first plank of his new economic programme. … Brazil’s Meirelles unveils first steps in economic …
17th May 2016
Peruvian economic activity growth slowed in March but, taken together with February’s stronger outturn, the data still point to GDP growth remaining robust at around 4.5% y/y in the first quarter of this year. … Peru Economic Activity …
16th May 2016
The Central Reserve Bank of Peru kept interest rates on hold at 4.25% for a third consecutive month, but we suspect that further rate hikes are still on the way in the second half of the year. Indeed, if a June rate hike in the US sparks another leg down …
13th May 2016
The larger-than-expected 2.0% y/y drop in Mexican industrial production growth in March was particularly disappointing given that it followed a strong 2.6% y/y rise in February. Today’s data mean that last month’s preliminary Q1 GDP estimate, which showed …
12th May 2016
After a rollercoaster week, in which impeachment proceedings were suspended and then reinstated, Brazil’s Senate has voted 55-22 to put President Rousseff on trial. A new government under Vice President Michel Temer is likely to pursue more …
The Mexican government’s bailout of the country’s state-owned energy company Pemex does not have major fiscal implications. The costs are manageable and non-recurring, so should not require substantial adjustments to current budget plans. However, it does …
11th May 2016
