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Mexican industrial production data for July were a little stronger-than-expected. But even so, the figures suggest that the economy remained weak at the start of Q3. … Mexico Industrial Production …
11th September 2015
The economic outlook for Latin America remains pretty gloomy. Weaker growth in China and lower global commodity prices will depress export revenues and, as incomes fall, cause domestic demand to soften further. Unemployment will rise. At the same time, …
Although the timing of Peru’s decision to raise interest rates by 25bp (to 3.50%) was a surprise, we had been expecting the central bank to shift into tightening mode in the coming quarters. Policymakers have made it clear that this isn’t the start of an …
The pick-up in Colombian GDP growth in the second quarter was encouraging, but with the full effects of the fall in oil prices yet to feed through, this is as good as it’s going to get for the next eighteen months or so. Economic growth over the second …
10th September 2015
The drop in Brazil inflation from 9.6% y/y in July to 9.5% y/y in August should mark the start of a steady decline over the coming months. However, as the minutes from last week’s COPOM meeting (also released today) note, it’s going to be a slow grind on …
There is growing evidence that, even before the latest drop in oil prices, the US shale oil revolution had started to weigh on oil producers in Latin America. Oil exports to the US from three of the region’s major oil producers (Venezuela, Mexico and …
Mexican inflation continued to buck the regional trend in August, falling for a tenth consecutive month, to 2.6% y/y. With the headline rate falling further below target, and the peso stabilising against the dollar recently, the case for Banxico leaving …
9th September 2015
The further rise in Chilean inflation last month, to 5.0% y/y, coming on the back of the hawkish message in the central bank’s latest Inflation Report, suggests that rate hikes may come sooner than we had originally expected. Even so, we still do not …
8th September 2015
The stronger-than-expected increase in Chile’s IMACEC activity indicator in July was encouraging, even more so given that activity was affected by strike action at state owned mining company, Codelco . Today’s data are an early sign that, after stalling …
7th September 2015
The move by Brazil’s government to yet again lower its fiscal targets for 2016 means that its projections for the public finances are finally starting to look realistic. But at the same time, they leave the public debt ratio on a path that is both high …
3rd September 2015
July’s dire industrial production data from Brazil suggest that the economy has made a terrible start to Q3 and are an ominous first sign that the country’s recession will extend into the second half of the year. … Brazil Industrial Production …
2nd September 2015
The drop in August’s manufacturing PMIs from both Brazil and Mexico follows the pattern set in other countries around the globe last month and will feed concerns about a more general downturn in the world economy. It’s striking, however, that in the case …
1st September 2015
The 1.9% q/q fall in second quarter GDP in Brazil was broadly in line with our forecast but a bit worse than the consensus had expected. To compound matters, revisions to the back series mean that the contraction in GDP in the first quarter of this year …
28th August 2015
The turmoil of the past few weeks has pushed many financial markets in LatinAmerica below our end-year targets. If we’re right in thinking that China’seconomy should avoid the hard landing that many now fear and that global commodity prices will stabilise …
27th August 2015
Latin America has found itself back under the spotlight in recent weeks, this time as concerns over the economic outlook for China – the largest trading partner for most countries in the region – have resurfaced. As it happens, we think the very worst …
26th August 2015
The latest slump in Brazilian markets has added to gloom over the outlook for the economy, but there are early signs that a much weaker real is now starting to benefit the country’s trade position. … Weaker real starting to bring benefits to …
24th August 2015
The drop in Mexican inflation in the first half of the month suggests that the sharp fall in the peso is still having little impact on domestic price pressures. While the recent sell-off in the currency might spook some members of Banxico’s MPC, today’s …
Data to mid-August provide a glimmer of hope that the big month-on-month increases in consumer prices in Brazil are now behind us. In year-on-year terms, inflation should peak this month, but it will be a slow grind down over the second half of this year …
21st August 2015
Second quarter GDP data from Mexico were a bit better than expected but don’tchange the bigger picture that economic growth in the first half of the year wasdisappointingly weak. There is some evidence that the economy picked up towardsthe end of the …
20th August 2015
A sharp fall in its currency, rising inflation and a widening current account deficit have increased the chance that Colombia’s central bank will tighten monetary conditions in the coming quarters. For now, given that we still expect fiscal policy to …
18th August 2015
The small fall in Chile’s GDP in the second quarter was partly the result of floods in the north of the country, but not entirely. All components of domestic demand contracted, suggesting that the steep decline in copper prices over the past year has …
We appreciate that we’re going out on a limb in saying this, but we don’t think that an interest rate hike next month in Mexico is necessarily the done deal that many now seem to assume. Indeed, a closer look at the minutes from last month’s policy …
17th August 2015
Following a temporary blip in May, economic activity in Peru picked up sharply in June. And thanks to the strength of today’s data, GDP over Q2 a whole probably grew at its fastest pace in annual terms since the first quarter of last year. … Peru Economic …
14th August 2015
Interest rates in both Chile and Peru were left unchanged yesterday and policymakers in both countries are still giving little indication that they expect to tighten monetary policy anytime soon, despite recent currency weakness and deteriorating …
A rebound in Mexican industrial production in June was always likely given the sharp fall in output in May. But the industrial sector probably made a meagre contribution to GDP growth over Q2 as a whole. More generally, we would need to see more than one …
11th August 2015
With most of the votes in Argentina’s primary elections now counted, it appears that Daniel Scioli, of the ruling left-wing Front for Victory coalition, is on course to win the Presidential elections on 25th October. But he will probably have to battle it …
10th August 2015
The fall in Mexican inflation in July to a new record low of 2.7% y/y brought further evidence that the continued depreciation of the peso isn’t fuelling price pressures. With inflation falling further below target, we continue to expect Banxico to keep …
7th August 2015
The further rise in Brazilian inflation last month to a twelve-year high of 9.6% y/y underscores the need for policymakers to keep interest rates high, even if – as they have signalled – the tightening cycle is over. Elsewhere, inflation in Chile …
The economic and political troubles facing Brazil have deepened over the past few weeks. The good news is that we think the big falls in the prices of the country’s commodity exports are probably now behind us. But economic weakness will persist for some …
6th August 2015
June’s industrial production data from Brazil, while better than expected, are still consistent with GDP falling by the most since the depths of the global financial crisis in Q2. … Brazil Industrial Production …
4th August 2015
The substantial cuts to Brazil’s primary surplus targets announced this month underline the inherent difficulty of fixing budget problems against the backdrop of a weakening economy. As it happens, the recent revisions have been a long time coming. We …
31st July 2015
Activity data from Chile were stronger than expected in June but, as a result of softer figures for April and May, we still think that GDP growth in Q2 will be weaker than in Q1. … Chile Retail Sales, Ind. Prod. & Copper Prod. …
30th July 2015
The decision by Brazil’s monetary policy committee (COPOM) to raise interest rates by another 50bp to 14.25% was largely expected, but the move to signal the end of the tightening cycle in the accompanying statement was less widely anticipated. Further …
The fact that many of the region’s currencies are now trading at or close to record lows against the dollar has grabbed all the headlines in recent weeks, but the falls of most currencies month-to-date – notably the Mexican peso – have actually been …
29th July 2015
A combination of increases in policy interest rates and curbs on lending by some public banks is taking some of the air out of Brazil’s credit bubble. So far it seems that the bubble is deflating without causing wider problems in the financial system. But …
28th July 2015
Mexico’s IGAE Activity Indicator for May was weak and suggests that economic growth is on course to slow to a sluggish 2.0% y/y in Q2, from 2.5% y/y in Q1. Nevertheless, we expect the economy to gather momentum over the rest of this year. … Mexico IGAE …
24th July 2015
The continued decline in inflation in Mexico in the first half of this month should further dispel fears that a weaker currency will have any meaningful impact on the headline rate. With inflation falling further below target, interest rates should remain …
23rd July 2015
The further rise in Brazil’s inflation in the first half of this month means that another 50bp hike in the Selic interest rate at next week’s COPOM meeting is almost a certainty. But there are signs that inflation is close to peaking and, as a result, we …
22nd July 2015
After a promising start to the year, Chile’s economy probably contracted in the second quarter due to the effects of the recent floods in the north of the country as well as a mini political crisis. Looking ahead, we continue to expect the economic …
21st July 2015
The drop in the peso to a record low against the dollar in recent weeks has rekindled concerns about what impact this will have on Mexico’s economy. In practice, however, the economics of currency depreciation are often misunderstood. And in the case of …
20th July 2015
Economic activity in Peru slowed sharply in May, but the recovery still looks to be on track and GDP growth is still likely to pick up in Q2. … Peru Economic Activity …
15th July 2015
Interest rates in Chile were left unchanged at 3.00% last night and the more dovish tone of the accompanying statement supports our long-held view that rate hikes are still some way off. We do not expect the central bank to start tightening monetary …
Mexico’s government will tomorrow auction rights to private companies to exploit oil reserves in the Gulf of Mexico – a move that marks the first step in opening up the country’s energy sector to private investment. In this Update we outline what to watch …
14th July 2015
The collapse in China’s stock market has rekindled fears over the outlook for its economy and led to renewed concerns about the spillovers to other EMs, including those in Latin America. As it happens, we continue to think that the worst fears about …
10th July 2015
The fall in Mexican industrial production in May was disappointing and almost certainly suggests that economic growth in Q2 will be even weaker than Q1’s lacklustre performance. That means the risks to our below-consensus GDP growth forecast for this year …
June’s inflation data from Mexico contain no signs that a weaker peso is fuelling price pressures. With inflation still below target, policymakers have room to keep interest rates low even if the Fed does start to raise rates later this year. … Mexico …
9th July 2015
The rise in inflation in Brazil to 8.9% y/y last month probably seals the deal for another 50bp hike in the benchmark Selic interest rate at this month’s COPOM meeting. Elsewhere, inflation in Chile surprised on the upside in June and this is likely to …
8th July 2015
Brazil’s political crisis has deepened over the past few weeks, with the latest testimonies in the so-called “car wash” probe bringing allegations of corruption at Petrobras a step closer to the door of President Rousseff. Financial markets have brushed …
6th July 2015
The 0.6% m/m increase in Brazil industrial production in May supports the message from last month’s PMI (released yesterday) that the economy could be nearing a bottom. We wouldn’t get too carried away by one month’s good data, but there are at least …
2nd July 2015
