Filtered by Subscriptions: Latin America Economics Use setting Latin America Economics
Brazil: watch the labour market Lula has continued to spook investors in Brazil. This week he once again disparaged the focus on fiscal responsibility and also questioned the benefits of central bank independence. And more market-friendly words from his …
20th January 2023
Widespread unrest across several regions in Peru could make the central bank’s job of reducing above-target inflation even more difficult while also threating to hamper activity in some of the country’s key industries, such as mining and tourism. Peru’s …
16th January 2023
Brazil riots: reflecting on the fallout The riots in Brasília last Sunday thankfully ended quickly. And the country’s financial markets, after losing ground on Monday, have rebounded over the course of this week. Investors have been buoyed by the fact …
13th January 2023
Industry stagnated towards end of last year, 2023 to be tough Mexico’s industrial sector stagnated in November as higher construction and utilities output offset a slump in manufacturing and mining. More timely survey indicators have continued to hold up …
11th January 2023
Inflation still too high for Copom to breathe easily The higher-than-expected Brazilian inflation reading of 5.8% y/y last month, coming alongside growing fiscal concerns, will give Copom more cause to delay the start of its easing cycle. The outturn was …
10th January 2023
Inflation falls again, Banxico to end tightening cycle in February Mexico’s headline inflation rate was unchanged at 7.8% y/y in December but policymakers at the central bank will have taken comfort from the fact that core price pressures are finally …
9th January 2023
The implications of the invasion of Brazil’s congress by protestors yesterday are mainly political. But the riots could result in a long-lasting risk premium on the country’s financial assets, particularly if they prompt President Lula to double down on …
A worrying first week of Lula’s presidency The biggest event in the region this week was the inauguration of Brazil’s president Lula on 1 st January. And his first actions (and those of some of his cabinet) provide reasons for investors to be concerned …
6th January 2023
Industry stuck in the doldrums The 0.1% m/m fall in Brazilian industrial production in November and the weak surveys for December provide further evidence that the economy is in the midst of a slowdown. But the central bank will wait for further signs of …
5th January 2023
A year to write home about 2022 was in many ways a memorable year for Latin America. With Argentina’s World Cup victory the trophy returned to Latin America for the first time in 20 years. And it’s been a good year off the pitch too. GDP growth has …
23rd December 2022
Big falls in inflation now behind us The Brazilian mid-month inflation figure for December was unchanged from the November full-month figure of 5.9% y/y, which provides an early sign that the big falls in inflation have now happened and it will be a much …
Fall in inflation paves the way for end of tightening cycle The second consecutive fall in Mexico’s mid-month inflation, to 7.8% y/y in December, confirms that inflation is now on a downward trajectory. This will allow Banxico to draw its tightening cycle …
22nd December 2022
Chile’s constitutional re-write: Attempt number two After three months of intense negotiations, Chile’s government and opposition parties agreed on a new process to re-write the constitution. This differs from the previous one (which led to a draft …
16th December 2022
Banxico delivers smaller 50bp dose of tightening, end of cycle close Mexico’s central bank slowed down the pace of tightening with a 50bp interest rate hike, to 10.50%, today and the accompanying statement made clear that the tightening cycle will soon …
15th December 2022
This is part of a series of reports outlining our key macro and market calls for 2023. Click here to view the full series. Our latest EM Outlook can be found here . EMs will experience one of the broadest slowdowns in GDP growth in 2023 since the 1990s. …
Peru ’s newly-inaugurated President Boluarte’s call to bring forward the next general election to 2024 has failed to pacify protesters who took to the streets following the impeachment of President Castillo last week. The unrest is already causing …
14th December 2022
Industry to struggle as US enters recession Mexico’s industrial sector posted a solid 0.4% m/m rise in output in October but the big picture is that industry has stagnated since the middle of this year. And while more timely survey indicators have held up …
12th December 2022
Political chaos rattles Peru It’s been a tumultuous week in Peru that culminated in the ousting of left-wing President Pedro Castillo on Wednesday after he attempted to stage a “self-coup”. He was arrested on charges of rebellion and conspiracy (and …
9th December 2022
Inflation eases further, but Copom’s eyes are on fiscal risks The further fall in Brazilian inflation, to 5.9% y/y, last month will help to ease the squeeze on household incomes. But with the prices of many core goods and services still rising rapidly …
Inflation drops back, but stronger core rate to prompt a bit more tightening Mexico’s headline inflation rate continued to drop back to 7.8% y/y in November but this was driven by weaker non-core inflation; core inflation actually strengthened further. We …
8th December 2022
The impeachment of Peru’s controversial (former) left-wing President Pedro Castillo might bring short-term relief to investors, but it does not solve Peru’s governability issues. With policy paralysis here to stay, business confidence and investment are …
The statement accompanying the Brazilian central bank’s meeting yesterday, at which the Selic rate was left at 13.75%, made clear that policymakers are increasingly concerned about fiscal loosening when president-elect Lula takes power. This reinforces …
Overview – The recent resilience of economic activity in Latin America will not last and we think that growth will slow by more than most expect in 2023. Having been among the first to tighten monetary policy last year and with interest rates well above …
7th December 2022
President-elect Lula’s plans to increase spending could raise Brazil’s public debt ratio by an additional 10% of GDP by the end of his presidential term in 2026. And while it seems likely that these plans will get diluted in congress, they still …
6th December 2022
Venezuela: a baby step towards boosting oil output A meeting between the Venezuelan government and the opposition last weekend prompted the US to take the first steps towards easing sanctions. But there’s still a long way to go before sanctions are …
2nd December 2022
A fleeting recovery The better-than-expected 0.3% m/m rise in Brazilian industrial production in October only partly reversed the falls in output in the previous few months. And surveys suggest that the sector fared much worse in November. This supports …
Slowdown now underway The weaker-than-expected Brazilian Q3 GDP growth figure, of 0.4% q/q, highlights that the weakening global economy and higher interest rates are bringing the recent period of strong growth to an end. And leading indicators suggest …
1st December 2022
Banxico tightening debate set to heat up Data and developments this week suggest that the debate at Banxico over when to end the tightening cycle is set to heat up. The risks are tilting towards rates rising a bit more than we currently expect. …
25th November 2022
Inflation appears to have finally peaked for emerging markets – but how quickly will price pressures now ease, and what will that mean for the 2023 outlook? In December's monthly dive into the big stories in EM macro and markets, economists from across …
24th November 2022
Stronger core inflation will support the hawks at Banxico The further fall in Mexico’s headline inflation rate, to 8.1% y/y, in the first two weeks of November was driven by easing non-core price pressures. But core inflation picked up, which will …
With the global economy headed for recession and commodity prices likely to come off their recent highs, Latin American exports will struggle over the coming quarters. Weakening global growth is also likely to cause risk appetite to deteriorate and large …
23rd November 2022
Lula’s spending cap exemption plans spook markets Brazil’s financial markets remained on the backfoot this week as the Lula team stepped up its fight against the spending cap. And, while officials have since tried to reassure investors, the developments …
18th November 2022
Teetering on the brink of recession The 1.2% q/q contraction in Chile’s economy in Q3 was even steeper than expected and we think that the downturn has further to run – our forecasts is for the economy to contract by 1.3% over 2023 as a whole. Meanwhile, …
Data released over the past month or so suggest that most economies across the region fared well in Q3. GDP growth in Mexico and Colombia came in well above expectations and hard activity data from Brazil point to another solid expansion last quarter too. …
17th November 2022
Strong Q3 to be followed by sharp slowdown The stronger-than-expected 1.6% q/q expansion in Colombia’s GDP in Q3 took output further above its pre-pandemic trend and means that Colombia is on course to be a regional outperformer in 2022. That said, there …
15th November 2022
While Colombia’s President Gustavo Petro initially made a promising start to his tenure, his recent interventionist comments have led to a sharp sell-off in local financial markets. Regaining investors’ trust while navigating the economy through a period …
14th November 2022
Lula starting to show his true colours? Developments this week poured cold water on the rally in Brazil’s financial markets that followed Lula’s election victory. Comments from Lula himself yesterday suggesting that higher spending should be prioritised …
11th November 2022
Another 75bp hike, but end of tightening cycle on the horizon Mexico’s central bank delivered a fourth consecutive 75bp interest rate hike, to 10.00%, today but, with inflation now past its peak and the economy likely to slow sharply over the coming …
10th November 2022
Further fall in inflation won’t stop Copom from keeping policy tight The fourth consecutive decline in Brazil’s inflation rate, to 6.5% y/y in October, will be welcomed by policymakers at the central bank. That said, inflation is still well above target …
Softer inflation gives Banxico food for thought, but 75bp hike on the cards Mexico’s headline inflation rate came in at a weaker-than-expected 8.4% y/y in October and, while this is unlikely to prevent Banxico from delivering another 75pb interest rate …
9th November 2022
Mexico’s current account deficit is likely to widen over the coming quarters and, while it will remain modest compared with other parts of Latin America, we expect the peso to come under pressure. Mexico’s current account has swung from a surplus of more …
7th November 2022
Lula’s early moves: tacking to the centre? Lula emerged victorious in Brazil’s presidential election last Sunday and political developments since then will have reassured investors. While President Bolsonaro didn’t concede defeat, he has accepted the …
4th November 2022
Colombia’s current account deficit has, somewhat surprisingly, widened this year despite the boost to the country’s terms of trade from high oil prices, and now stands at an alarming level. And the funding of the deficit has shifted towards more volatile …
1st November 2022
Industry a drag on growth in Q3 The 0.7% m/m decline in Brazilian industrial production in September suggests that the sector made a negative contribution to GDP growth over Q3 as a whole. With other sectors faring surprisingly well, Brazil’s economy …
Economy performed well in Q3, but tougher road lies ahead Provisional GDP figures show that Mexico’s economy expanded by a stronger-than-expected 1.0% q/q in Q3, but a recession in the US alongside tight fiscal and monetary policy mean that the economy …
31st October 2022
The narrow victory for Lula in the second-round of Brazil’s presidential election yesterday has, so far, thankfully not been contested by Bolsonaro. But there’s still likely to be a negative reaction in financial markets when they open later today. The …
The second-round of Brazil’s presidential election on Sunday is going down to the wire. While Lula came top in the first-round vote earlier this month, the key story was that incumbent president Jair Bolsonaro received more support than had been expected. …
28th October 2022
Brazil’s economy has a deep-seated problem of low productivity growth and it’s hard to see either presidential candidate undertaking the reforms needed to lift investment, strengthen competitive forces and tackle skills shortages. As a result, with the …
The hawkish language in the statement accompanying the Brazilian central bank’s decision late yesterday, at which it left the Selic rate at 13.75%, reinforces our view that the sharp fall in inflation in the last few months won’t push Copom to cut …
27th October 2022
Brazilians head to the polls on Sunday to decide who’ll become the country’s next president in a heated run-off election between incumbent Jair Bolsonaro and his left-wing rival Lula. Lula is still the front runner, but the race is looking much tighter …
25th October 2022
