Filtered by Subscriptions: Latin America Economics Use setting Latin America Economics
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
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 …
