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The weaker-than-expected Mexican inflation figure for April, of 2.5% y/y, down from 2.6% y/y in March, means that the MPC is unlikely to raise interest rates at the next few policy meetings. But with inflation still likely to edge up over the second half …
9th May 2016
Inflation in Brazil and Chile edged down last month and we expect it to continue its downward trend in both countries over the course of this year. … Brazil & Chile Consumer Prices …
6th May 2016
A combination of modest austerity, elevated inflation and increasing financial repression should keep Brazil’s high and rising public debt burden from becoming a major economic headache over the next couple of years. But whichever government emerges from …
4th May 2016
A larger-than-expected hike in interest rates last week, coupled with the fact that inflation should soon peak, means that we suspect that Colombia’s tightening cycle is now nearing an end. We are pencilling just one more 25bp hike this year, which would …
3rd May 2016
The 1.4% m/m rise in Brazilian industrial production in March was encouraging, but it partly reflects payback for February’s huge 2.7% m/m fall. Moreover, the annual pace of contraction accelerated further and it looks like the sector subtracted around …
The acceleration in Mexican GDP growth in the first quarter of this year, to 2.7% y/y, is encouraging but, with a number of headwinds facing the economy, we suspect that growth will slow over the remainder of this year. … Mexico GDP (Q1, …
29th April 2016
March activity data for Chile were a mixed bag, but taken together with last month’s strong figures, they suggest that GDP growth picked up to over 2.0 %y/y in Q1. Nonetheless, we don’t expect the economy to accelerate much further this year. … Chile …
The latest activity data from across Latin America have been encouraging, but the bigger picture is that the region’s economy is still struggling. Industrial and retail output in Brazil fell at a slower pace in February than January. At the same time, …
28th April 2016
Brazil’s COPOM left its benchmark Selic interest rate unchanged at 14.25% yesterday and, while the case for monetary easing is growing, the accompanying statement reinforced our view that interest rate cuts are still a little way off. As things stand, we …
Surging copper production will continue to boost GDP growth in Peru over the next couple of years and, while growth is likely to ease in 2018 as mining output stabilises, we expect a recovery in other sectors to ensure that the economy continues to …
27th April 2016
The Argentine government’s return to global capital markets after a 15-year hiatus was met with a surge of investor optimism and coincided with a rally in its financial markets. Meanwhile, the continued recovery in commodity prices has seen markets …
26th April 2016
Venezuela’s acute power crisis, which has now forced the government into full-blown rationing, has dealt yet another blow to the beleaguered economy. We reckon that the power crisis could subtract around 1.5%-pts from GDP growth this year, pushing the …
25th April 2016
A combination of tighter monetary and fiscal policy will offset the benefits of a weaker peso and keep the brakes on Mexico’s economy over the coming years. Nonetheless, we don’t think it’s time to throw in the towel just yet. The structural reform …
20th April 2016
Argentina’s government will today issue dollar-denominated bonds on the global capital market for the first time in over fifteen years. In this Update , we answer five key questions about the debt sale. … 5 questions on Argentina’s return to the bond …
19th April 2016
The decision by Peru’s central bank to hold interest rates at 4.25% for a second consecutive month suggests that policymakers believe inflationary risks are now waning. But we doubt inflation will fall back as quickly as the central bank expects and the …
15th April 2016
The decision just announced by a US appeals court effectively clears the way for the Argentine government to return to international capital markets imminently. This isn’t the end of the road for the debt saga just yet – it still seems likely that the …
13th April 2016
Concerns about the deepening political crisis understandably dominated our conversations during a trip to Brazil this week, with a growing number of local market participants now warning of complete dysfunction within government and a crisis of leadership …
The Central Bank of Chile’s decision to leave interest rates on hold at 3.50% reflects policymakers concerns about the weakness of the economy and reinforces our view that further rate hikes are unlikely to come until the second half of the year. … …
The stronger-than-expected rise in Mexican industrial production growth in February, to 2.6% y/y from 0.8% y/y in January, was encouraging, but it is too early to suggest that the sector has turned a corner. A looming fiscal squeeze, combined with …
11th April 2016
The early results of Peru’s presidential election suggest that the race will go to a run-off on 5th June. But given that both leading candidates are likely to continue with the current government’s market-friendly policies, the outcome should be welcomed …
The sharp fall in Brazilian inflation in March, to 9.4% y/y from 10.4% y/y in February, could prompt COPOM to take a less hawkish stance. But with inflation still likely to remain well above target this year, and the real vulnerable to renewed weakness, …
8th April 2016
Colombian inflation hit a 15-year high of 8.0% y/y in March – one of the highest rates among major EMs – and, while most of the rise has been due to temporary factors that should start to fade in the second half of the year, there are signs that …
7th April 2016
The fall in Mexican inflation last month, to 2.6% y/y from 2.9% y/y in February, confirms that overall price pressures in the economy remain in check. But the recent steady rise in core inflation suggests that underlying price pressures are building. We …
The rapid improvement in Brazil’s trade balance is due mainly to a collapse in imports caused by the extreme weakness of domestic demand. But there are also signs that a weaker real is starting to help exporters. We expect this to continue despite the …
6th April 2016
The run-up to Peru’s presidential election on Sunday 10th April has been overshadowed by concerns about the neutrality of the country’s electoral authorities. But, whatever the eventual outcome, the vote is unlikely to mark a major shift away from the …
5th April 2016
The Mexican government announced over the weekend preliminary plans to make additional cuts to government spending next year. This will keep the budget deficit in check against a backdrop of much lower oil receipts. But because the fiscal squeeze next …
4th April 2016
The sharp fall in Brazilian industrial production in February suggests that the economy was on course to contract in Q1 even before the more recent escalation in the country’s political crisis. The business surveys for March suggest that conditions …
1st April 2016
This report is only available as a PDF. Click to download. … New Argentine GDP data a step in the right direction …
31st March 2016
Financial markets across Latin America have fared well over the past month but the incoming economic data suggest that the region is still struggling. Most of the attention has, of course, focussed on Brazil, where the political crisis is spiralling. …
30th March 2016
The better-than-expected Chilean activity data for February suggest that, after weakening significantly in recent months, the economy has started to stabilise. Nonetheless, growth is unlikely to pick-up much over the course of this year. … Chile Retail …
According to widespread reports, Brazil’s largest political party, the PMDB, will later today announce that it plans to leave government – leaving President Rousseff closer to impeachment, and paving the way for VP Michel Temer to take over as soon as …
29th March 2016
We expect the Central Bank of Brazil to shift its bias towards looser policy over the coming months, but both the timing and the size of any cuts in interest rates will be determined by what happens to the real. If the currency maintains its recent …
A recovery in global commodity prices has helped to support a broad-based rally in Latin America’s financial markets so far this month. Brazilian assets are down a little today but they have outperformed the rest of the region over the past couple of …
24th March 2016
The larger-than-expected fall in Brazilian inflation in the first half of this month, to 10.0% y/y from 10.4% y/y over February as a whole, is encouraging. We expect inflation to continue to fall back over the course of this year, but it will be a slow …
23rd March 2016
The fall in Mexican headline inflation in the first half of March, to 2.7% y/y from 2.9% y/y over February as a whole, confirms that overall price pressures remain in check for now. However, the rise in core inflation suggests that underlying price …
22nd March 2016
Given that Brazil’s growing debt burden is denominated overwhelmingly in local currency there is little need for the foreign currency financing that an IMF bailout would provide. Instead, the main benefit of calling in the IMF would be to add much-needed …
President Mauricio Macri’s first 100 days in office have seen an impressive range of measures to put Argentina’s fragile balance of payments position on a more sustainable footing. By any reasonable yardstick the early days of his presidency must …
21st March 2016
The sharp slowdown in Chile’s GDP growth in the final quarter of last year means that the economy grew by a disappointing 2.0% over 2015 as a whole and we doubt the economy will pick-up soon. We expect growth to remain around 2.0% in 2016. … Chile GDP & …
18th March 2016
The Central Bank of Chile’s decision to keep interest rates on hold at 3.50% for the third consecutive month reinforces our view that the weakness of the economy will ensure the pace of further tightening remains gradual. We expect just one 25bp hike over …
It’s becoming increasingly difficult to keep tabs on the deepening crisis in Brazil. How much of it is due to political problems? How much is economic? And what should investors watch for as events unfold? In this Update we provide our take on the key …
16th March 2016
Peruvian economic growth slowed sharply in January, but the economy remains in a strong position and we expect GDP growth to accelerate this year. … Peru Economic Activity …
15th March 2016
2016 is shaping up to be a better year for investors in Latin America than 2015. With global commodity prices now at a bottom and set to edge up this year, we expect most equity markets in the region to perform well and most currencies to stabilise. …
The return to growth in Mexican industrial production at the start of this year is encouraging, but the underlying trend is still weak. What’s more, the pick-up was due to an improvement in mining and construction output, which may not be sustained in …
11th March 2016
The Central Reserve Bank of Peru’s decision to leave interest rates unchanged at 4.25% is unlikely to mark the end of the tightening cycle and we expect further rate hikes over the coming months. … Peru holds rates, but the tightening cycle has further …
Colombia’s economy grew by a respectable 3.3% y/y in the final quarter of 2015, but we expect the economy to slow this year as the impact of lower oil prices continues to bite and economic policy tightens further. … Colombia GDP …
10th March 2016
Brazil’s financial markets rallied after news broke last week that former President Lula had been detained (and later released) in relation to the ongoing corruption probe at Petrobras. But this reaction is difficult to square with the reality that the …
9th March 2016
The further rise in Mexican inflation in February to 2.9% y/y from 2.5% y/y in January, was due largely to a pick-up in food inflation, rather than an increase in general price pressures. Even so, with the headline rate likely to breach the central bank’s …
The fall in Brazilian inflation in February, to 10.4% y/y from 10.7% y/y in January, was driven entirely by the unwinding of the impact of regulated price hikes implemented in the same period last year. However, with inflation likely to be slow to fall …
The smaller-than-expected fall in Chilean inflation in February suggests that price pressures remain strong. This creates a dilemma for the central bank, which is likely to be reluctant to hike rates further at a time when the economy is weakening. … …
8th March 2016
