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The collapse in Brazil’s Composite Manufacturing and Services PMI in February has grabbed plenty of headlines but it’s notable that it has not been repeated in other (more reliable) business surveys. While these show that Brazil has remained mired in …
3rd March 2016
The sharp drop in Brazil’s manufacturing PMI for February is particularly disappointing given that it follows a general improvement in the survey data for January, and has dealt a blow to hopes that the economy might be nearing the bottom. In contrast, …
1st March 2016
Chile’s economy remained relatively weak in January as the industrial sector continued to struggle. While we expect conditions to improve over the course of this year, today’s data underscore the fragile nature of the economic recovery. … Chile Retail …
29th February 2016
Policymakers in Mexico and Colombia this month responded to the sharp falls in their currencies by hiking interest rates and stepping up intervention in foreign exchange markets. These moves appear to have succeeded in supporting their currencies over the …
25th February 2016
The past month has seen governments in several countries in Latin America announce measures to repair some of the fiscal damage caused by lower commodity prices. The most impressive package came from Mexico, where spending will be trimmed by almost 1.2% …
24th February 2016
The further jump in Mexican inflation in the first half of February, to 2.9% y/y, from 2.5% y/y over January as a whole, was due to a rise in food inflation, which is typically volatile and should prove temporary. Even so, with the central bank on …
The final estimate of Q4 Mexican GDP confirmed that the economy grew by 2.5% y/y, but revisions to the back series show that the slowdown at the end of last year was sharper than previously thought. Looking ahead, we expect a recently-announced fiscal …
23rd February 2016
The rise in Brazilian inflation in the first half of this month is concerning, given that January’s data had suggested the headline rate was close to peaking. We still expect inflation to drop back over the course of this year once one-off food price …
The surge in Peruvian GDP growth in the final quarter of 2015 was partly due to the temporary boost from the opening of a new copper mine. Nonetheless, the wider economic recovery appears to be going from strength to strength and the economy should remain …
22nd February 2016
We estimate that only one-sixth of the jump in Brazil’s budget deficit over the past two years has been due to a drop in tax receipts. Instead, the bulk (five-sixths) has been due to a rise in expenditure. Most of this rise in spending has been due to an …
19th February 2016
There are good reasons to think that the recession in Brazil – which is now the worst since at least the 1930s – should start to ease this year. But the good news ends here. While growth should return towards the end of 2016, the recovery will be …
18th February 2016
The move by Venezuelan policymakers to devalue the official exchange rates and raise fuel prices will help to ease the pressure on the public finances, but the measures fall chronically short of what is needed to close the country’s huge budget deficit. …
Expectations of lower inflation have probably played only a minor role in the fall in Treasury inflation compensation – the gap between the nominal yields of conventional Treasuries and the real yields of Treasury Inflation Protected Securities (TIPS) – …
17th February 2016
The Peruvian central bank’s decision to hike interest rates by 25bp for the third consecutive month, to 4.25%, as well as the more hawkish tone of the accompanying statement, point to concerns that price pressures are building. As a result, we have raised …
12th February 2016
Stagnant industrial output at the end of last year means that the sector probably added a meagre 0.1%-pt to overall GDP growth in Q4. Industry may remain under pressure in the near term, but we still think the prospects for the sector over the medium term …
11th February 2016
The Zika virus has hit the headlines in recent weeks due to its rapid spread across Latin America and the suspected link with thousands of cases of serious birth defects in Brazil. But, while it is clearly an important public health issue and there is …
9th February 2016
The jump in Mexican inflation in January, to 2.6% y/y, from 2.1% y/y in December, was due to a sharp rise in food inflation, which is likely to have been driven in part by a weaker currency. But with inflation still well below the central bank’s 3% …
Argentina’s debt proposal to US holdout creditors is an encouraging development, but there are still a number of hurdles to overcome in order for the government to return to global capital markets. … Argentina debt offer encouraging, but more work still …
8th February 2016
The surge in Chilean inflation in January was largely due to planned tax increases and had been anticipated. As such, we don’t expect it to a trigger a policy response from the central bank and interest rates are likely to be left unchanged on Thursday. …
Brazilian inflation held steady at 10.7% y/y in January and, while the headline rate may now have peaked, it is likely to remain well above the central bank’s target this year. Accordingly, we see little room for interest rate cuts. … Brazil Consumer …
5th February 2016
The small fall in Mexico’s headline manufacturing PMI is a disappointing sign that the factory sector remained relatively weak at the start of 2016. However, we still expect conditions to improve over the coming months. … Mexico Manufacturing PMI …
2nd February 2016
The rise in Brazil’s headline manufacturing PMI in January was encouraging, particularly given that it corroborates with other leading indicators which point to (very early) signs of stabilisation. However, the best we can say is that the pace of …
1st February 2016
The stronger-than-expected 2.5% y/y rise in Mexican GDP in Q4 confirmed that economic growth remained solid – if unspectacular – in the fourth quarter. We expect the economy to kick on this year as the industrial sector emerges from its mini-slump. … …
29th January 2016
The weaker-than-expected Chilean activity data for December confirm that the economy slowed in Q4. Our GDP Tracker suggests the economy grew by a lacklustre 2.0% y/y over Q4 as a whole. … Chile Retail Sales, Ind. Prod. & Copper Prod. …
The latest fall in global commodity prices has hit financial markets across the whole of Latin America but the economic impact will be more dispersed. Global energy prices have seen the biggest falls since the start of the year, which will hit the …
27th January 2016
The jump in Mexican inflation in the first half of January, to 2.5% y/y (from 2.1% y/y in December) was due largely to unfavourable base effects and, as a result, is unlikely to change the outlook for monetary policy. We continue to expect only a gradual …
22nd January 2016
Financial markets in Latin America have had a torrid start to this year. The renewed falls in commodity prices have been the main factor behind the latest falls in equities and currencies in the region, but domestic concerns have also played a role. In …
Today’s Brazilian inflation data, which showed that the headline rate held steady at 10.7% y/y in the first half of January, are likely to give policymakers at the central bank another reason to hold off raising interest rates further in the near future. …
Venezuela’s central bank has released economic data for the first time since 2014 and the figures are predictably horrific. With oil prices now languishing below $30pb, and the country’s political crisis intensifying, it’s difficult to see this year being …
18th January 2016
The strong rise in Peruvian economic activity in November gives the first clear sign that the economy picked-up in the final quarter of last year. As such, it looks like GDP probably grew by around 3.0% over 2015 as a whole. … Peru Economic Activity …
15th January 2016
The decision by Peru’s central bank to hike interest rates for a second consecutive month underlines its concerns about above-target inflation and we have brought forward our forecast for 50bp of further hikes to this year, from 2017. Meanwhile, despite …
The widening of Colombia’s current account deficit in recent months is a major cause for concern and a key factor behind our below-consensus view that growth will slow further in 2016. … Warning signs from Colombia’s current …
14th January 2016
Mauricio Macri has made a strong start to his term as president of Argentina, tackling some of the country’s biggest macroeconomic distortions in his first month in office. There’s work still to do – fiscal policy is yet to be tightened, and we’re no …
12th January 2016
The weaker-than-expected Mexican industrial production growth figure for November is not something to be overly concerned about – the slowdown was due entirely to a sharp drop in construction output, which is likely to be a one-off. Even so, it’s clear …
11th January 2016
Fears that Brazil’s government will respond to a deepening recession by resorting to populist economic policies have surfaced over the past week. As things stand, we don’t think there is much evidence of any such shift at this stage. But if it …
8th January 2016
The further rise in Brazilian inflation in December, to a 12-year high of 10.7% y/y, now means that anything less than a 50bp rate hike at this month’s COPOM meeting is likely to see financial markets come under further pressure. Meanwhile, inflation in …
The further decline in Mexican inflation in December, to 2.1% y/y, underscores the lack of price pressures in the economy. Against this backdrop, we expect only modest monetary tightening in 2016, even if the Fed hikes rates more aggressively. … Mexico …
7th January 2016
The 12.4% y/y fall in Brazilian industrial production in November was even worse than October’s 11.1% y/y decline, and adds to evidence that the economy’s recession deepened in Q4. … Brazil Industrial Production …
In response to the deepening economic and political crisis in Brazil we are marking down some of our key forecasts. We now expect interest rates to be raised further, the currency to weaken a little more and the economy to contract again this year. … New …
5th January 2016
Economic activity in Chile picked up in November, but even so, it looks like GDP growth over Q4 as a whole probably didn’t accelerate from Q3. … Chile IMACEC …
The rise in Brazil’s headline manufacturing PMI in December provides a rare piece of good news for a country in the grip of both a deep recession and an escalating political crisis. Elsewhere, Mexico’s PMI nudged lower in December and suggests that …
4th January 2016
Investors in Brazil are understandably focussed on the economic implications of the recent change in Finance Minister and the impeachment proceedings against President Rousseff. But we think the way in which the country’s credit and housing bubbles play …
21st December 2015
The stronger-than-expected rise in Brazilian inflation, to 10.7% y/y, in the first half of December was driven by an increase in food inflation that should ease by mid-2016. Nonetheless, the risk of further rate hikes are growing. … Brazil IPCA-15 …
18th December 2015
Last night’s decision by central banks in Mexico and Chile to hike interest rates suggests that the actions of the US Fed still hold sway with policymakers in Latin America. Nonetheless, we suspect that domestic concerns will mean that policy in both …
The weaker-than-expected rise in Peruvian economic activity in October suggests the recovery is still struggling to gain momentum. Nonetheless, there are some encouraging signs that the economy will pick up over the coming months. … Peru Economic …
15th December 2015
Currencies in Latin America appear to have shrugged off the prospect of a looming US interest rate hike, with most exchange rates broadly unchanged against the dollar month-to-date. The currencies of Mexico and Colombia are the exceptions, but we suspect …
The past month in Latin America has seen economics take a back seat to politics. The good news has come from Argentina, where the inauguration of Mauricio Macri as president has buoyed both hopes for reform as well as financial markets. Investors also …
14th December 2015
The sharp slowdown in Mexican industrial production growth in October, to 0.5% y/y, was disappointing, but we don’t think this is the start of a renewed downturn in the sector. The data from month to month are volatile, and we still see reasons to expect …
11th December 2015
The Central Reserve Bank of Peru’s decision to follow up September’s surprise interest rate hike with a second 25bp hike, to 3.75%, shows that policymakers are still concerned about the persistence of above-target inflation. We suspect it is just another …
The modest pick-up in Colombian GDP growth suggests that the economy is coping relatively well with the significant terms of trade shock from lower oil prices and growth looks set to be a respectable 3.0% over 2015 as a whole. But we suspect the recent …
10th December 2015
