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Mexican inflation edged down to 3.0% y/y in February and there is still little evidence to suggest that a weaker peso is feeding through to higher inflation. Inflation should remain close to the central bank’s 3% target throughout 2015-16, meaning that …
9th March 2015
The slump in commodity prices since last summer has exposed fragilities in the balance of payments of several economies in Latin America. But while that has left some governments looking to China for loans to plug the holes in their current accounts, we …
6th March 2015
Brazilian inflation surged to its highest annual rate in a decade last month and the relentless increase, coupled with the recent sell-off in the real, bolsters the case for interest rate hikes to continue at the current pace of 50bp. Meanwhile in Chile, …
The 2.0% m/m rise in Brazilian industrial production in January looks encouraging, but a rebound was always expected after the sharp 3.2% m/m drop last month. And the bigger picture is that industrial production continues to contract sharply in annual …
4th March 2015
The slowdown in private sector lending growth across Latin America should help to ease concerns about the build-up of credit bubbles in the region. However, the accumulation of private sector debt over the past decade could still create problems for banks …
3rd March 2015
A strong rebound in mining output led to a sharp rise in industrial production in January. But mining output is volatile and we wouldn’t read too much into this. Even so, there are signs from the rest of the activity data that the economy maintained a …
27th February 2015
The Brazilian real has tumbled to its weakest level against the dollar since 2005 in recent days. We suspect that this has more to do with deteriorating economic fundamentals and suggestions from policymakers that central bank support for the currency may …
26th February 2015
Mexico’s current account deficit narrowed to 2.1% of GDP on a four-quarter sum in Q4 and, with the worst of the falls in oil prices now behind us, we think it could narrow a touch further to about 1.5% of GDP during the course of 2015. … Not much cause …
25th February 2015
Growth in Latin America appears to have picked up in recent months. Our proprietary GDP Tracker suggests that the region’s economy expanded by about 1.5% y/y in the fourth quarter of last year, having grown by less than 1% y/y in both the second and third …
A further sharp rise in Brazilian inflation in the first half of February has tipped the balance towards another 50bp increase in the Selic interest rate at next month’s central bank meeting, rather than a smaller 25bp that had seemed possible a few …
24th February 2015
Interest rates in Colombia were left unchanged at 4.50% on Friday but a slightly more dovish tone in the accompanying statement, combined with the announcement of budget cuts over the weekend triggered by the fall in oil prices, have bolstered the case …
23rd February 2015
Although annual GDP growth in Peru dropped to a five-year low in the fourth quarter of last year, an encouraging rebound in investment and private consumption drove a sharp pick-up in the quarterly rate of growth. Looking ahead, we expect the economy to …
20th February 2015
Mexican GDP growth accelerated to 2.6% y/y in the fourth quarter of last year, but the economy has yet to really take off. With fiscal policy set to be tightened further over the course of this year following the sharp fall in oil prices since last …
It’s difficult to be precise, but we think the direct impact of the corruption scandal at Petrobras , including the effects of reduced investment by the company and others that have been implicated, could shave around 0.5% off Brazil’s GDP this year. …
19th February 2015
December’s activity data suggest that economic growth in Peru dropped to a five-year low in the fourth quarter of last year. A fiscal stimulus will start to bear fruit in early 2015, but weak data mean that the central bank may also opt to lower interest …
16th February 2015
The collapse in oil prices will cause the economic and financial crisis in Venezuela to deepen over the course of this year. In this Focus we answer a series of key questions that we have received from clients over the past few weeks. … Venezuela’s …
Interest rates in both Chile and Peru were left unchanged last night and, while we do not expect further monetary stimulus in Chile as its economy is finally showing signs of strengthening, we think there is still a possibility of a small cut in interest …
13th February 2015
An intensifying drought in Brazil has made it increasingly likely that the authorities will implement some form of power rationing over the coming months. Much remains uncertain, but we think that power rationing could plausibly shave 0.5-1.0%-pts off GDP …
12th February 2015
A programme of government austerity will result in modest improvements to Brazil’s budget and current account deficits over the next year but at the expense of extremely weak growth and, in the near term at least, higher inflation. Those hoping for a …
11th February 2015
Mexican industrial production growth accelerated to 3.0% y/y in December and it should continue to pick-up over the coming months as the manufacturing sector benefits from stronger US demand and the current drag from mining eases. … Mexico Industrial …
Following last year’s sharp downturn, economic growth in Latin America should improve this year and next. But the pace of the recovery will be slow-going and GDP growth will remain far weaker than during the past decade. We are forecasting GDP growth of …
9th February 2015
Mexican inflation fell to a three-and-a-half year low of 3.1% in January and looks set to remain close to the central bank’s 3% target throughout 2015-16. As a result, monetary policy is likely to remain loose for the foreseeable future. Indeed, we still …
The sharp rise in Brazilian inflation to 7.1% last month was driven by a combination of higher food prices, caused by the continuing droughts, and increases in regulated prices as part of the government’s austerity plan. Inflation is likely to rise …
6th February 2015
The huge 2.8% m/m fall in Brazilian industrial production in December was caused by a collapse in capital goods production, which tends to be extremely volatile. Even so, the underlying picture remains that Brazil’s industrial sector is struggling. Output …
3rd February 2015
Spending cuts announced by the Mexican government worth 0.7% of GDP are unlikely to be enough to compensate for the loss of oil revenues this year and further spending cuts are likely later this year and in 2016. Against a backdrop of tightening fiscal …
2nd February 2015
Brazil’s manufacturing PMI rose to a 12-month high in January but we wouldn’t read too much into this – the relationship between the headline PMI and the hard monthly data on industrial production is not particularly strong, meaning we would hesitate …
Interest rates in Colombia were left unchanged at 4.50% on Friday but, while the accompanying statement remained relatively balanced, the downward revision to this year’s GDP growth forecast suggests that policymakers are becoming more dovish. …
Interest rates in Mexico were left unchanged at 3.0% last night and concerns amongst policymakers about the weakness of the peso suggest that cuts are unlikely in the very near-term. For our part, we do not think that the recent depreciation of the peso …
30th January 2015
December’s activity data suggest that economic growth in Chile recovered in the fourth quarter of last year. But the bigger picture is that growth over 2014 as a whole was probably just 1.8%, the weakest rate since 2009. … Chile Retail Sales, Ind. Prod. …
29th January 2015
Data released over the past month have highlighted the contrasting outlook for inflation in Brazil compared with that of the rest of the region. After a brief period within the central bank’s target range at the end of last year, it looks like Brazilian …
27th January 2015
We think the prevailing view that close economic ties with the US will force Mexico to raise interest rates if, as expected, the Fed starts to tighten later this year is wrong. Indeed, with lower oil prices likely to mean that fiscal policy becomes less …
23rd January 2015
The big news from yesterday’s central bank meeting in Brazil isn’t the decision to raise interest rates to a three-year high of 12.25% - this was expected by pretty much everyone. Instead, the major surprise was that policymakers seem to be shifting …
22nd January 2015
Latin America’s financial markets have suffered so far this year following fresh declines in the prices of a number of the region’s commodity exports – notably copper and oil. Most equities and currencies are down month to date, while the bond market now …
21st January 2015
Good news remains thin on the ground in Brazil, but we take some comfort from the fact that the country’s frothy housing market has so far managed to avoid a hard landing. It’s still early days, but the initial signs are that Brazil’s housing bubble is …
20th January 2015
We have revised down many of our forecasts in recent weeks and, on the whole, expect GDP growth and inflation in Latin America to be lower than the consensus forecasts this year. As a result, policymakers may surprise the market by lowering interest …
Although the timing of last night’s interest rate cut in Peru caught us (and the market) by surprise, we had been one of the few forecasters expecting rates to fall in the first half of this year. The accompanying statement suggests that this isn’t the …
16th January 2015
The key elements of Brazil’s President Rousseff’s policy agenda for her second term in office have started to emerge over the past month. The central theme is a return to “orthodoxy”, with fiscal and monetary policy likely to tighten. But while a period …
14th January 2015
The continued slide in oil prices will weigh heavily on Colombia’s economy. We have lowered our 2015 GDP growth forecast to just 2.5% (from 3.8% previously), which is well below the 4.3% forecasted by the consensus. This would be the weakest outturn since …
13th January 2015
Balance of payments problems in Venezuela and Argentina have deflected attention away from the fact that current account positions across much of the rest of Latin America have deteriorated significantly over the past year or so. This doesn’t necessarily …
12th January 2015
Mexican industrial production growth slowed in November, but the bigger picture is that both the manufacturing and construction sectors are performing well and should continue to do so. As such, industry is likely to make a decent contribution to overall …
9th January 2015
The drop in Brazilian inflation in December was enough to ensure that the central bank met its target for 2014 but doesn’t spell the end of the country’s inflation battle. We expect it grind lower over the course of this year but inflation will remain …
Mexican inflation fell for the second consecutive month in December, confirming that it has peaked. We expect the CPI rate to fall further over the coming months, and to remain close to the central bank’s 3% target from mid-year onwards. … Mexico …
8th January 2015
The sharp fall in Brazil industrial production in November leaves it on course to contract in Q4 and suggests the economy ended 2014 on a predictably weak footing. GDP is likely to have done little more than stagnate over the year as a whole and the …
Ecuador’s economy faces a slump this year as the sharp fall in oil prices threatens to open up large twin current account and budget deficits. As a result, we are revising down our forecast and now think that the economy will stagnate in 2014 having …
7th January 2015
The Venezuelan economy faces a multi-year recession following the recent fall in oil prices. GDPprobably contracted by 3.5% last year and we now suspect that it could decline by another 5.0% thisyear. But recession is probably the best case scenario. With …
6th January 2015
We’ll start 2015 with some good news: having slowed to a five-year low of just 1.5% in 2014, we expect GDP growth in Latin America to accelerate this year. The bad news is that the pick-up is likely to be modest, perhaps to around 2.5%. In this Focus we …
5th January 2015
Financial markets across Latin America have come under renewed pressure in the final weeks of this year. Part of the trigger has been renewed falls in oil prices. The currencies of two of the region’s largest oil exporters – Colombia and Mexico – have …
22nd December 2014
Data to the middle of this month suggest that inflation is on track to fall back within target range in December. However, we doubt that this will be enough to prevent policymakers from raising interest rates further in early 2015. … Brazil IPCA-15 …
19th December 2014
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 …
18th December 2014
The fall in most Latin American currencies over the past few weeks has taken them through both our end-2014 and our end-2015 forecasts. We still expect most currencies – notably the Brazilian real – to weaken further against the dollar next year and …
