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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
Mauricio Macri will be sworn in as president of Argentina today against a backdrop of lofty expectations in financial markets for policy change. The lesson from other EMs is that big reforms tend to happen in the first 100 days of a new presidency. As …
The bigger-than-expected drop in Mexican inflation in November underscores the lack of price pressures in the economy. Against this backdrop, although it will be a close call, we are sticking with our non-consensus view that the Mexican central bank will …
9th December 2015
The stronger-than-expected rise in Brazilian inflation, to a 12-year high of 10.5% y/y, was driven in large part by a jump in food inflation. While this pick-up should be temporary, given that it comes on the back of hawkish minutes from last month’s …
Venezuela’s electoral council has finally conceded that the opposition won a two-thirds supermajority in Sunday’s legislative elections and this is certainly a game changer. It will give the opposition power to change the constitution and could next year …
The various factors pushing up food inflation in Brazil should start to fade by Q2 2016 and, with the boost from this year’s regulated price hikes set to ease too, headline inflation is likely to begin declining around the same time. But before this …
8th December 2015
The further fall in Chilean inflation in November is an encouraging sign that price pressures in the economy are easing. While this reduces the likelihood of the central bank hiking interest rates later this month, inflation will remain high and a gradual …
7th December 2015
Venezuela’s opposition comfortably won yesterday’s legislative elections, although with 22 seats still to be declared, the size of the victory (and therefore the impact on policymaking) still hangs in the balance. A two-thirds super majority is still well …
Venezuela’s opposition looks set to triumph in legislative elections on Sunday but, unlike last month’s election upset in Argentina, this won’t trigger a shift towards more orthodox policymaking. If anything, we expect the country’s economic, political …
4th December 2015
As we anticipated, Brazilian markets have so far shrugged off last night’s news that impeachment proceedings will be launched against President Rousseff . As the dust settles, the biggest consequence of the political wrangling that will inevitably follow …
3rd December 2015
The 11.2% y/y fall in Brazilian industrial production in October was even worse than September’s 10.9% y/y decline, and adds to evidence that the economy’s deep recession continued at the start of Q4. Meanwhile, the minutes from last month’s COPOM …
The further fall in Brazil’s manufacturing PMI in November, to a fresh five-year low of 43.8, adds to evidence that the economy is yet to bottom out. The data are broadly consistent with industrial output continuing to contract by around 8% y/y in Q4. …
1st December 2015
Third quarter GDP data from Brazil made for grim reading, with the economy contracting by a larger-than-expected 1.7% q/q and falls earlier in the year revised higher. As a result, it seems likely that GDP will fall by something like 3.5% this year …
The election of Mauricio Macri , the reformist candidate in Argentina’s presidential election, has transformed the country’s economic outlook. The result was largely anticipated – markets had jumped ahead of the vote and the reaction to the result itself …
30th November 2015
Weaker Chilean activity data for October underscore the gradual nature of the economic recovery. Nonetheless, it too early to worry about a renewed slowdown in GDP growth in Q4. … Chile Retail Sales, Ind. Prod. & Copper Prod. …
The smaller-than-expected 25bp hike in Colombia’s benchmark interest rate, to 5.50%, suggests that policymakers are starting to worry about the impact of tighter monetary policy on the economy. But, with inflation likely to continue rising over the coming …
Brazil’s financial markets have come under pressure in recent days following the escalation of corruption allegations at state-owned oil company Petrobras, but the bigger picture is that they have performed well in November as a whole. Markets elsewhere …
26th November 2015
We expect the economic downturn in Latin America to bottom out towards the turn of this year and conditions to improve in 2016. However, the recovery will be slow-going and uneven. For a start, the lagged effects of currency weakness will keep inflation …
25th November 2015
Weaker-than-expected Mexican inflation in the first half of November underscores the lack of price pressures in the economy. This reinforces our view that the central bank is likely to raise interest rates more gradually than markets expect, even as the …
24th November 2015
The election of pro-business candidate Mauricio Macri as Argentina’s new president is likely to herald a much-needed shift towards orthodox economic policymaking. In the near term, this is likely to be painful. Indeed, we expect the country to fall back …
23rd November 2015
Opinion polls are pointing to a narrow victory for pro-reform candidate Mauricio Macri in Sunday’s presidential election in Argentina and, if he prevails, the outlook for the economy would undoubtedly brighten. But it’s worth bearing in mind that the …
20th November 2015
The latest rise in Brazilian inflation, to a 12-year high of 10.3% y/y in the first half of this month, was due to a combination of a rise in food inflation, which appears to be due to a weaker real and a strong El Niño, and another increase in regulated …
19th November 2015
