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During the past decade, the global economy has transitioned out of an era in which globalisation was the key driver of economic and financial relationships into one shaped by geopolitics. Previously, most governments had believed that closer economic …
16th November 2023
Growing external and domestic headwinds suggest to us that Brazilian financial markets will come under pressure over the short term and are unlikely to resume their outperformance beyond that. Brazilian assets have fared relatively well amid the ongoing …
15th November 2023
This page has been updated with additional analysis since first publication . Struggling for momentum The softer-than-expected 0.2% q/q rise in Colombian GDP in Q3, coming alongside signs that the economy was weakening towards the end of the quarter, …
Copom’s inflation and fiscal worries There were two key-takeaways from the minutes to last week’s Brazilian central bank meeting, which were released earlier this week. First, despite the recent falls in inflation, Copom remains concerned about …
10th November 2023
The fall in Brazilian inflation to 4.8% y/y in October confirms that the mini inflation cycle has now topped out. Inflation will continue to fall in the coming months, paving the way for further interest rate cuts. That said, we expect inflation to remain …
Banxico remains hawkish, but may be starting to contemplate cuts Mexico’s central bank sprung no surprises and left its policy rate at 11.25% at today’s Board meeting and the accompanying statement retained its hawkish bias. That said, there was a very …
9th November 2023
Protests against a large copper mine have raged in Panama over the past few weeks. If mine production ceased, there would be noticeable impact on global supply but the risk of this happening is small. The mine is a key part of Panama’s economy and is only …
Higher services inflation to keep Banxico in hawkish mood Mexico’s headline inflation rate dropped to a 32-month low of 4.3% y/y in October, but the fresh rise in services inflation will alarm officials at Banxico. We doubt this will prompt a restart to …
The Vaca Muerta shale formation will alleviate some of the pressure on Argentina’s fragile balance of payments position by substantially reducing the country’s gas import bill and raising oil export revenues. While this is good news for the crisis-ridden …
8th November 2023
Growth in Costa Rica is likely to slow by more in 2024 than officials currently expect amid weaker growth in the US, high commodity prices and tight fiscal policy. Further ahead, though, a burgeoning medical goods sector, robust FDI inflows and the …
7th November 2023
Copom cuts, but fiscal risks return to the spotlight Fiscal risks are rearing their head again in Brazil after President Lula suggested that the government may no longer aim for a balanced primary budget next year as previously pledged. Finance Minister …
3rd November 2023
Brazil’s central bank (BCB) cut the Selic rate by 50bp, to 12.25%, at yesterday’s Copom meeting and signalled again that further similar reductions lie in store over the next few meetings. Even so, with strong wage growth set to keep inflation above …
2nd November 2023
Another solid quarter, but slowdown awaits Mexico’s economy posted solid growth of 0.9% q/q in Q3, but we still think a slowdown is on the cards over the coming quarters as tight monetary policy takes a heavier toll and weaker growth in the US weighs on …
31st October 2023
Argentina: it’s not the economy, stupid? Elections in Argentina rarely fail to surprise and Sunday’s vote was no exception. While it was widely expected that the election would go to a run-off between Peronist and current Economy Minister Sergio Massa …
27th October 2023
We think the Chilean peso is poised for a rebound in 2024 as the headwinds from the narrowing interest rate differential and the terms of trade deterioration reverse. The Chilean peso has underperformed nearly all other major emerging market currencies …
26th October 2023
This page has been updated with additional analysis since first publication . Copom on course for another 50bp cut next week The Brazilian mid-month inflation figure for October, of 5.0% y/y, confirms that the recent rise in inflation has now passed its …
Brazil and Mexico will outperform others in the region this year, but that’s likely to flip on its head in 2024 as they slow – and by more than most expect – while the Andean economies recover. Rapid wage growth will keep inflation above target for some …
25th October 2023
This page has been updated with additional analysis since first publication . Pick-up in services inflation to keep Banxico in hawkish mood The fall in Mexico’s headline inflation rate to a 31-month low of 4.3% y/y in the first half of October masked a …
24th October 2023
The strong showing for Peronist candidate and current Economy Minister Sergio Massa in Sunday’s presidential election in Argentina means that the run-up to the second round vote in November is likely to see further pre-election fiscal giveaways. But these …
23rd October 2023
Argentina’s election also a vote on its China stance Argentines head to the polls on Sunday in the first round of what’s arguably one of the most important presidential elections in the country’s recent history. You can find a note previewing Sunday’s …
20th October 2023
There are mounting signs that labour market conditions in many parts of Latin America are starting to loosen, but wages are still rising at a rapid pace and it will take time for wage growth to return to levels that are consistent with central banks’ …
19th October 2023
Argentines face the choice between a shock-therapy style approach to tackling the country’s economic issues or more of the same unorthodox policymaking when they head to the polls in Sunday’s presidential election. The latest polls suggest that, while …
17th October 2023
The reported deal that is close to being reached to lift US sanctions on Venezuela’s oil sector in return for competitive elections would help to raise the country’s oil output from very depressed levels. But the sector requires enormous investment to …
16th October 2023
Ecuador’s presidential run off Ecuadorians head to the polls on Sunday in a run-off vote for the country’s next president that pits left-wing candidate Luisa González against centre-right businessman Daniel Noboa. Whoever wins will serve the remainder of …
13th October 2023
Construction boom helps to offset manufacturing weakness Mexico’s industrial sector posted a modest 0.3% m/m rise in output in August as another jump in construction output more than offset renewed weakness in manufacturing. But more timely indicators …
12th October 2023
Tightness in Mexico’s labour market continues to fuel wage pressures, with real wages now rising at their fastest pace since the early 2000s. But this isn’t being matched by productivity growth and, in turn, threatens to keep inflation above Banxico’s …
11th October 2023
This page has been updated with additional analysis since first publication . Services inflation remains stubbornly strong The further rise in Brazilian inflation to 5.2% y/y probably marks the peak in this mini-inflation cycle and the headline rate …
Fresh rise in services inflation to harden Banxico’s hawkish stance Mexico’s headline inflation rate continued to edge lower, to 4.5% y/y, in September on the back of softer core price pressures. Even so, the fresh rise in services inflation will …
9th October 2023
Feeling the spillovers… Latin America has been far from immune from spillovers from the sell-off in global bond markets. (For more on the impact on the global economy, see here .) Like in DMs, local currency bond yields in the region have risen sharply, …
6th October 2023
The sell-off in bond markets has taken a breather today, helped in part by softer data on the US labour market. However, the scale of the moves over the past week has invoked comparisons to previous financial crises that have been caused by sharp moves in …
4th October 2023
Brazil’s monetary easing cycle will probably lead to higher spending in interest rate sensitive areas, such as furniture and appliances, autos and construction materials. But that won’t be enough to prevent overall GDP growth from slowing sharply – and by …
3rd October 2023
This page has been updated with additional analysis since first publication . Industry stumbled in Q3 The 0.4% m/m rise in Brazilian industrial production in August failed to fully offset the decline in July and suggests that the sector was as a drag on …
Brazil’s communication problems The minutes to last week’s central bank meeting in Brazil again presented a somewhat different picture to the statement accompanying the decision itself. Whereas the statement was largely unchanged from the previous one, …
29th September 2023
Banxico turns up its hawkish rhetoric Mexico’s central bank, as widely expected, left its policy rate unchanged at 11.25% at today’s Board meeting and the accompanying statement remained very hawkish. We think Banxico will be the last major central bank …
28th September 2023
The drivers of Brazil’s recent period of rapid growth seem to be the subject of a heated debate at the central bank – and policymakers’ conclusions will play a big role in determining the pace and scale of the easing cycle. For our part, we think the key …
Brazil and Mexico will outperform others in the region this year, but that’s likely to flip on its head in 2024 as they slow – and by more than most expect – while the Andean economies recover. Central banks across the region will continue to lower …
This page has been updated with additional analysis since first publication . Inflation data and minutes pour cold water on hopes for larger rate cuts The jump in Brazilian inflation to 5.0% y/y in the first half of September, taken together with the more …
26th September 2023
Brazil’s services inflation: how soft? The big economic event this week was the central bank meeting in Brazil on Wednesday at which the Selic rate was lowered by another 50bp (to 12.75%). As we noted in our response , the key messages in the statement …
22nd September 2023
Inflation falls, but Banxico in no rush to cut Mexico’s headline inflation rate came in a little weaker than expected at 4.4% y/y in the first half of September while services inflation remained elevated. Coming alongside strong wage growth and the …
Overview – Brazil and Mexico will outperform others in the region this year, but that’s likely to flip on its head in 2024 as they slow – and by more than most expect – while the Andean economies recover. Central banks across the region will continue to …
21st September 2023
BCB not opening the door to larger cuts The Brazilian central bank’s (BCB’s) 50bp cut in the Selic rate (to 12.75%) and accompanying statement are likely to dash hopes that policymakers will up the pace of the easing cycle, at least in the short term. The …
20th September 2023
Argentina: Devaluation triggers inflation jump This week’s inflation data from Argentina made for a grim reading. Consumer prices rose by 12.4% m/m in August on the back of last month’s devaluation , pushing inflation to 124% y/y – the highest rate since …
15th September 2023
There’s little evidence in the investment and trade data so far to back up the commonly-cited narrative that Mexico is experiencing a “nearshoring” boom. The one sector where there are some signs of this is industrial real estate, which suggests that it’s …
12th September 2023
This page has been updated with additional analysis since first publication Another 50bp cut on the cards despite rise in inflation The rise in Brazilian inflation to 4.6% y/y in August won’t prevent the central bank from delivering another 50bp cut, to …
Industry continuing to hold up well, for now Mexico’s industrial sector posted a slightly larger-than-expected 0.5% m/m increase in output in July and the survey evidence suggests that activity continued to hold up well in August. But we still think that …
11th September 2023
Sheinbaum follows in Amlo’s footsteps Former Mexico City mayor Claudia Sheinbaum was unveiled as the ruling Morena party’s presidential candidate this week and with her facing off against the main opposition candidate Xóchitl Gálvez in next June’s …
8th September 2023
Inflation falls again, but Banxico to stay focussed on sticky services inflation Mexico’s headline inflation rate edged down again in August, to 4.6% y/y, on the back of softer core price pressures but, with services inflation still proving stubborn, …
7th September 2023
The more cautious tone of the Monetary Policy Report released by Chile’s central bank today supports our view that, once the large falls in inflation are behind us in early 2024 and the economy recovers, the easing cycle is likely to shift down a gear. We …
6th September 2023
Having ballooned during the post-pandemic recovery, Colombia’s current account deficit has started to narrow and should continue to do so in the coming quarters. This, alongside the shift in financing towards more stable FDI inflows, leaves the peso less …
5th September 2023
This page has been updated with additional analysis since first publication. Industry set to drag on growth in Q3 The larger-than-expected 0.6% m/m decline in Brazilian industrial production in July, taken together with weakness in some of the surveys for …
