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Colombia maintained a relatively strong pace of growth in the third quarter, seemingly driven by construction and agriculture. However, given the recent oil price falls, we expect the economy to lose some steam in the coming quarters. … Colombia GDP …
15th December 2014
Another fall in mining output meant that Mexican industrial production growth was weaker-than-expected in October. But the bigger picture is that the rest of the industrial sector continued to perform well. We expect strong construction and manufacturing …
12th December 2014
Interest rates in Chile were left unchanged at 3.00% last night but, with the economic recovery expected to be slow-going and inflation likely to have peaked, we are sticking to our non-consensus forecast for rates to be cut by another 50bp next year. …
All of the signs suggest that Venezuela is already suffering an economic crisis, making it highly likely that the government will default on its foreign currency debt. … Four charts that show Venezuela is in a …
10th December 2014
An improvement in Argentina’s foreign currency liquidity makes it much less likely that the government will reach a settlement with holdout creditors in the New Year and exit default. Indeed, we continue to think that any agreement is unlikely at least …
9th December 2014
The slight fall in Mexican inflation to 4.2% y/y last month suggests that the CPI rate has peaked and that it is on course to fall to the central bank’s 3% target by the second quarter of next year. … Mexico Consumer Prices …
The continued slide in the price of oil has sent Colombia’s financial markets tumbling over the past month. The peso has dropped to a five-year low against the dollar, breaching both our end-14 and end-15 forecasts, which we have revised accordingly. At …
8th December 2014
The 0.5% m/m increase in consumer prices in Brazil in November was enough to keep the annual rate of inflation above the upper bound of the central bank’s target range for the fourth consecutive month, albeit by the narrowest of margins. Interest rates …
5th December 2014
Mexico’s growth story has lost some of its shine in recent weeks. We still expect GDP growth to accelerate in 2015. But the recent fall in oil prices, coupled with the fact that fiscal policy is likely to be tighter than we had previously assumed, means …
4th December 2014
The Central Bank of Brazil stepped up the pace of policy tightening last night but the accompanying statement gave a strong signal that future interest rate hikes are likely to be gradual. This supports our view that rates may not rise as far as is …
Having only just managed to limp out of recession in Q3, October’s industrial production data suggest that Brazil’s economy continued to struggle at the start of Q4. … Brazil Industrial Production …
2nd December 2014
Continuity of economic policy following Mr. Vásquez’s victory in Uruguay’s presidential election is likely to ensure that inflation remains high and economic growth relatively weak. We are forecasting GDP growth to average just 3% over the next four …
1st December 2014
The November manufacturing PMI surveys continue to point to a sustained acceleration in Mexican manufacturing growth over the coming months. By contrast, another fall in the Brazilian PMI signals a weak fourth quarter. … Mexico & Brazil Manufacturing …
Interest rates in Colombia were left unchanged at 4.50% today but, with the risks to economic growthskewed to the downside and inflation under control, we think that rate cuts are becoming increasinglylikely. By contrast, the consensus still expects rates …
28th November 2014
The writing is on the wall for Venezuela as falling oil prices exacerbate severe strains in the balance of payments. Both the government’s ability and willingness to service its foreign currency debt will be tested over the coming months, and we continue …
The 0.1% q/q increase in Brazil GDP in Q3 means that the economy has limped out of recession, but the weakness of growth underlines the scale of the challenge facing the new team of economic policymakers unveiled yesterday. … Brazil GDP …
The announcement of a new economic team in Brazil – and the nomination of Joaquim Levy as Finance Minister in particular – will strengthen hopes for a return to more orthodox policies during President Rousseff’s second term in office. But while fiscal …
27th November 2014
Having increased steadily over the course of this year, there are signs that inflation in both Brazil and Mexico has now peaked. Data to the middle of November suggest that it should drop back in both countries this month, and further falls seems likely …
Strong government spending drove a small pick-up in Peru’s GDP growth in the third quarter. But the bigger picture is that most other parts of the economy remained weak. … Peru GDP …
25th November 2014
Most of the region’s currencies have continued to depreciate against the US dollar so far this month, extending a period of weakness that began back in August. Looking ahead, while we think that the big falls in currencies are now behind us, we do expect …
24th November 2014
Mexican GDP growth accelerated to its fastest pace since 2012 in the third quarterand, with demand from the US set to strengthen, we expect the economy to continueto build momentum over the coming quarters. As a result, Mexico should be theregion’s stand …
21st November 2014
The further decline in Brazilian inflation in the first half of November will be welcomed by policymakers, not least because the headline rate fell back into the target range for the first time since August. But with inflation likely to be slow to fall …
19th November 2014
Interest rates in Chile were left unchanged last night at 3.00% and, although policymakers continued to signal the end of the easing cycle, we still think that it has a little further to run. With inflation set to fall back into target and economic growth …
The official data published by the Brazilian authorities give a false impression of the country’s fiscal health. We estimate that various accounting tricks have helped to narrow the reported government budget deficit by between 1.5% and 3.0% of GDP. At …
18th November 2014
Annual GDP growth in Chile dropped to a five-year low in Q3, but on a quarterly basis growth edged up a little. We expect a further, albeit gradual, recovery over the coming quarters. Meanwhile, the current account widened a touch in Q3, but this was …
Interest rates in Peru were left unchanged at 3.50% last night but, with economic growth still weak and inflation likely to fall back into target in the coming months, we are comfortable with our forecast for at least one more 25bp rate cut in the current …
14th November 2014
The growing pile of cash held abroad by US firms, which has now reached more than $2trn, or 12% of GDP, is unlikely to provide much of a boost to the economy, not least because the prospects of that cash being repatriated are fairly low. … A limp …
13th November 2014
A decline in mining output weighed on Mexican industrial production in September, but strong growth in the manufacturing and construction sectors suggests that the rest of industry is in good shape. With the decline in mining output set to ease, we expect …
11th November 2014
The pick-up in Mexican inflation from 4.2% in September to 4.3% in October probably marks the peak for this cycle. We expect it to edge down over the rest of this year and think it could reach the central bank’s 3% target by mid-2015. … Mexico Consumer …
7th November 2014
The larger-than-expected drop in Brazilian inflation last month will come as a welcome relief to policymakers but is unlikely to prevent interest rates from rising further over the coming months. Elsewhere in the region, the sharp jump in inflation in …
Dilma Rousseff’s triumph in last month’s Brazilian presidential election made it a hat-trick of victories for incumbents in Latin America this year. Meanwhile, in Uruguay the Frente Amplio party is on course to retain power later this month. But in this …
5th November 2014
September’s Brazilian industrial production data suggest that the sector remained a drag on the overall economy in the third quarter and, with both domestic and external demand set to remain weak, it is unlikely to take over as a driver of growth in the …
4th November 2014
October’s PMI survey suggests that Brazilian manufacturing will continue to contract in year-on-year terms as we head into 2015. By contrast, the survey offers further evidence that Mexican manufacturing growth will build momentum over the coming months. …
3rd November 2014
Interest rates in Colombia were left unchanged at 4.50% last night and with economic growth slowing and inflation unlikely to pose a problem for policymakers, further interest rate hikes now seem unlikely. In fact, to the extent that rates are changed in …
31st October 2014
The surprise decision by Brazil’s central bank to raise interest rates now, rather than waiting for Dilma Rousseff’s new government to take shape, is an early sign that tackling inflation could be given greater priority in Dilma’s second term. The focus …
30th October 2014
Data for September suggest that conditions in some parts of Chile’s economy – notably manufacturing – improved following a weak performance in August. But the bigger picture is that GDP growth appears to have slowed even further in Q3 as a whole – perhaps …
29th October 2014
After a rollercoaster campaign that at times had promised to deliver a much-needed shift in economic policy, presidential elections in Brazil ultimately delivered more of the same. Dilma Rousseff was returned to office by the slimmest of margins and the …
28th October 2014
Dilma Rousseff's narrow victory in yesterday’s presidential run-off in Brazil has dented hopes that the elections might deliver much-need economic policy reforms. Growth in Ms. Rousseff’s first term in office was already the weakest under any president …
27th October 2014
The slowdown in Latin America over the past year is more likely to be the start of a new phase of weaker growth than a temporary blip. We expect regional GDP growth to remain stuck at 2-3% for the next decade and for interest rates to remain low for a …
24th October 2014
Capital outflows following the Argentine government’s default probably contributed to the slump in economic activity in August, leaving the economy on course to contract by 1-2% this year. Unless the government can solve the economy’s shortage of foreign …
On the face of it, the Venezuelan government’s restructuring of petro-loans from China should boost foreign currency revenues and ease the economy’s severe dollar drought. But in reality, the deal will only offset the impact of recent oil price falls, …
23rd October 2014
The latest polls suggest that this weekend’s run-off in Brazil’s presidential election is still too close to call, which we suspect favours the incumbent, Dilma Rousseff, over the challenger, Aécio Neves. In this Election Watch we outline what a victory …
Following last month’s broad sell-off in “risky” assets, in which financial markets in Latin America were hit across the board, the performance this month has been more mixed. While equities have extended their losses, currencies and bonds have fared …
22nd October 2014
Interest rates in Chile were cut by 25bp to 3.00% last night and, although the accompanying statement suggests that we may be nearing the end of the easing cycle, we expect further cuts over the next couple of quarters. We’re sticking to our forecast for …
17th October 2014
The biggest loser from the drop in oil prices within Latin America will be Venezuela and, although the government may make its debt servicing obligations this month, a default seems more likely than not in the next couple of years if oil prices remain at …
16th October 2014
Activity data for August contain some evidence that conditions in Brazil’s beleaguered economy may have started to improve. But as things stand it seems the best we can hope for is that GDP in the third quarter as a whole was broadly flat in q/q terms. …
Fresh falls in global commodity prices in recent weeks have stoked concerns about how Latin America will fare as the tailwinds from the global commodities boom fade. The short point is that regional growth will be much weaker in the years ahead. But while …
13th October 2014
Interest rates in Peru were left unchanged at 3.50% last night but with economic growth still weak and inflation likely to remain within target over the coming months, we are comfortable with our forecast for at least one more 25bp rate cut in the current …
10th October 2014
Stronger investment spending looks set to underpin faster economic growth in Mexico over the coming years. So in contrast to Brazil where weak investment has caused capacity constraints to build and looks set to leave growth stuck at around 1.5% in …
9th October 2014
The latest rise in Brazilian inflation, which has pushed it further above the upper bound of the central bank’s target range, will give further ammunition to Aécio Neves ahead of his run-off against President Rousseff later this month. It also strengthens …
8th October 2014
