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The prospect of further policy easing in the developed world is stoking fears about asset price bubbles in Latin America. High commodity prices, good growth prospects and comparatively high returns, make the region attractive to investors. As a result, …
28th October 2010
While the death of the powerful former President of Argentina, Nestor Kirchner, is sad news, speculation is mounting that it will lead to a brighter outlook for the economy. It is too soon to tell, but even a small shift towards more market-friendly …
The recent rapid appreciation of the Colombian peso bears all the hallmarks of so-called ‘Dutch Disease’. But while policymakers are rightly concerned about the implications for the competitiveness of non-commodity sectors, there is little they can do to …
25th October 2010
Last night, the Brazilian Central Bank held interest rates at 10.75% for the second consecutive month. Concerns about the strength of the real mean that rate hikes are off the agenda for the foreseeable future. Rather, fiscal policy needs to be tightened …
21st October 2010
The recent influx of foreign capital into Brazil is likely to be sustained over the coming months and quarters. But while this should ensure that the economy continues to grow at a decent pace, there is a risk that rapid inflows eventually prove …
19th October 2010
Policymakers across the region are facing a tricky balancing act. On the one hand, capital inflows are likely to remain healthy over the coming months. Additional liquidity generated by further policy easing in the developed world will be attracted into …
18th October 2010
Last night’s decision by the Central Bank of Chile (BCC) to slow the pace of monetary tightening was driven entirely by currency considerations. Fiscal policy will have to play a key role in managing demand from here on and the risks to our dovish …
15th October 2010
We have nudged up our near-term projections for commodity prices in response to recent rises and as a result have revisited our forecasts for Latin America. Growth is still likely to slow next year, but not by as much as we had previously envisaged. At …
14th October 2010
The Brazilian presidential election is set for a second round of voting on 31st October and the latest opinion polls suggest that it may be a tighter race than many had expected. While Dilma Rousseff is still the favourite, Jose Serra is closing the gap. …
13th October 2010
The Central Bank of Peru’s (BCRP’s) surprise decision to hold interest rates at 3.0% last night adds weight to our view that rate hikes will be gradual. We continue to expect rates to end next year at 4.0%. … Peru: BCRP pause, underlines gradual pace of …
8th October 2010
Although Brazilian inflation accelerated in September, the pick-up was driven by food prices. With the economy now growing at a sustainable rate, we expect the headline rate of inflation to remain at around the BCB’s 4.5% target over the next year or so. …
7th October 2010
September’s IMEF survey brought further evidence that Mexico’s recovery is starting to slow. We expect growth to dip to just 2.5% next year and interest rates to remain at their current record low of 4.5% until 2012. … More bad news on Mexico's …
5th October 2010
Brazil’s presidential election sprang into life yesterday after Dilma Rousseff failed to gain the 50% of votes needed to secure an outright victory in the first round of voting. She remains the favourite but will now face a run-off against Jose Serra, …
4th October 2010
Today’s raft of data brought further evidence that the recent strength of the real is squeezing Brazilian manufacturers. With the Central Bank now much more relaxed about the outlook for inflation than it was a few months ago, interest rates are going …
1st October 2010
Governments in Latin America are becoming increasingly concerned about rapid currency appreciation, and for good reason. For a start, most currencies (with the notable exception of the Mexican peso) now look overvalued. More importantly, however, recent …
30th September 2010
Last night’s warning by the Brazilian Finance Minister, Guido Mantega, that an ‘international currency war’ has broken out has grabbed some predictable headlines. We discussed the issue of rapid currency appreciation in Latin America in a recent Focus …
28th September 2010
This weekend’s elections provide the strongest evidence yet that Venezuela’s economic woes have begun to dent President Chavez’s popularity. All eyes are now on the 2012 presidential elections and, with the opposition set to mount a vigorous challenge to …
27th September 2010
Colombian Q2 GDP growth came in well below consensus, but in line with our forecast of 4.5% y/y. While global headwinds could cause the pace of growth to slow to around 3.0% in 2011, the mediumterm outlook remains very favourable. … Colombian GDP growth …
23rd September 2010
Latin America’s banking sector remains in good shape and robust credit growth should continue to support the region’s impressive recovery for a while yet. But while the outlook for Latin America’s banks remains good, several developments warrant careful …
Latin America’s floating currencies have bounced back strongly after a brief wobble in May and, with the notable exception of the Mexican peso, most now look expensive relative to ‘fair value’. Concerns about the competitiveness of non-commodity exporters …
22nd September 2010
After a rapid rebound from last year’s recession, it seems that growth in Latin America is now starting to ease to a more sustainable pace. Monetary tightening has further to run in Chile and Peru, where interest rates are still below their neutral level. …
20th September 2010
The Central Bank of Chile (CBC) last night hiked interest rates by 50bps to 2.5%, as expected. In the near-term, the strong pace of growth means that policymakers will probably continue to raise rates to a more neutral level of 4%. But with concerns over …
17th September 2010
The Central Bank of Colombia (BANREP) this afternoon announced that it will resume market intervention to stem the appreciation of the peso. History shows that this may be successful in preventing the currency from appreciating further, but it is unlikely …
15th September 2010
Brazilian consumers made a weaker than expected start to Q3, adding support to our view that interest rate hikes are likely to remain off the agenda for the rest of this year. Looking ahead, while consumer spending growth has now shifted to a more …
14th September 2010
Colombian interest rates are converging towards those in Chile and Peru. While the strength of the peso has kept Colombian rates down this year, a more general improvement in policymaking in recent years justifies lower rates over the medium-term. We …
13th September 2010
Last night, the Central Reserve Bank of Peru (BCRP) hiked interest rates by 50bps to 3.0%, as expected. With the economy still growing at a red-hot pace, we expect rates to rise to 4.0% by year-end. But with concerns about a global slowdown likely to …
10th September 2010
The outlook for Latin America remains good and, while the developed world will struggle to grow by 2% next year, we expect the region as a whole to grow by 4%. Brazil, Chile, Peru and Colombia will lead the way, while Venezuela will continue to lag well …
According to a report in this morning’s Financial Times, the Argentine government has performed a sharp u-turn and will now allow the IMF to scrutinise its much-maligned national accounts in an attempt to settle its debt owed to western governments (the …
9th September 2010
This report is only available as a PDF. Click to download. … Markets still overestimating rate hikes in Chile …
8th September 2010
This report is only available as a PDF. Click to download. … Brazil: beware the pitfalls of resource-based development …
7th September 2010
This report is only available as a PDF. Click to download. … Brazilian growth slows to a more sustainable pace …
3rd September 2010
This report is only available as a PDF. Click to download. … Brazil: Rates on hold as fears about overheating subside …
2nd September 2010
This report is only available as a PDF. Click to download. … Brazil Election Watch: Becoming a one horse race …
31st August 2010
This report is only available as a PDF. Click to download. … Peru surges ahead while the outlook for Argentina deteriorates …
27th August 2010
Growth in Brazil has shifted to a more sustainable pace in recent months, but otherwise the region’s recovery remains on track. For now, at least, the major threat to growth stems from global rather than local developments. While we expect the world’s …
This report is only available as a PDF. Click to download. … Brazil: current account financing becoming a concern …
25th August 2010
This report is only available as a PDF. Click to download. … Markets still overestimating the pace of tightening …
23rd August 2010
This report is only available as a PDF. Click to download. … Mexico: Q2 GDP likely to be as good as it gets …
20th August 2010
This report is only available as a PDF. Click to download. … Brazil: shifting to a more sustainable pace of growth …
19th August 2010
This report is only available as a PDF. Click to download. … Chile: Q2 data confirm that the recovery is back on track …
18th August 2010
This report is only available as a PDF. Click to download. … Brazil Election Watch: Where's the fiscal giveaway? …
16th August 2010
From the perspective of economic policy, the over-riding priority for Brazil’s new president must be to raise the level of domestic savings. Without this, much-needed investment will have to be funded from overseas, raising the risk that periods of good …
11th August 2010
This report is only available as a PDF. Click to download. … Mexican inflation falls again, rate hikes still some way off …
9th August 2010
This report is only available as a PDF. Click to download. … Peru surprises again, rates heading for 3.5% by year-end …
This report is only available as a PDF. Click to download. … Brazilian inflation dragged down by food prices …
6th August 2010
This report is only available as a PDF. Click to download. … Chile's post-earthquake bounce starting to fade …
5th August 2010
This report is only available as a PDF. Click to download. … Brazil's industrial slowdown becoming a cause for concern …
3rd August 2010
This report is only available as a PDF. Click to download. … Argentina is losing competitiveness, and quickly …
29th July 2010
This month’s data have brought fresh signs that the region’s recovery, which has so far been pretty impressive, is starting to lose some of its steam. Brazilian industrial production stagnated in monthon- month terms in May and April’s decline was revised …
27th July 2010
This report is only available as a PDF. Click to download. … Venezuelan rift unlikely to derail the Colombian economy …
23rd July 2010
