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Latin America Data Response

Latin America Data Response

Brazil IPCA-15 (May 2022)

The further rise in Brazilian inflation, to 12.2% y/y in the middle of May, supports our view that there will be another 75pb of hikes in the current tightening cycle (to 13.50%). Investors seem to have come round to this view recently. LatAm Drop-In (26th May, 10:00 ET/15:00 BST): Join our 20-minute briefing about Colombia’s election and other regional political and fiscal risks – including Lula vs Bolsonaro in October. Register here.

24 May 2022

Latin America Data Response

Mexico Bi-Weekly CPI (May)

While Mexico’s headline inflation edged down to 7.6% y/y in the first two weeks of May, this will provide little comfort to the central bank as price pressures remain stubbornly strong. The risks are still skewed towards Banxico becoming more aggressive and delivering a 75bp rate hike at its next meeting in June. LatAm Drop-In (26th May, 10:00 ET/15:00 BST): Join our 20-minute briefing about Colombia’s election and other regional political and fiscal risks – including Lula vs Bolsonaro in October. Register here.

24 May 2022

Latin America Data Response

Chile GDP (Q1)

The 0.8% q/q contraction in Chile’s GDP in Q1 suggests the economy is coming back down to earth after a stellar 2021, and there is a growing chance of a recession this year. Meanwhile, the current account deficit widened to a worryingly large 7.3% of GDP, making the economy especially vulnerable to a further tightening of external financial conditions.

18 May 2022
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Latin America Data Response

Brazil IPCA (Apr. 2022)

The jump in Brazilian inflation to 12.1% y/y in April was driven by a broad based increase in price pressures and supports our view that the central bank’s tightening cycle has further to run. We still expect an additional 75bp of hikes in the Selic rate (to 13.50%) over the coming months – markets have shifted this way over the past week. EM Drop-In (17th May): Do current EM debt strains point to a repeat of the kinds of crises seen in the 1980s and 1990s? Join our special briefing on EM sovereign debt risk on Tuesday. Register now.

Latin America Data Response

Mexico Consumer Prices (Apr.)

The rise in Mexico’s headline and core inflation in April, to 7.7% y/y and 7.2% y/y respectively, has a bit further to run in the near term. This will prompt Banxico to deliver another 50bp rate hike this week, to 7.00%, and we expect more monetary tightening than the consensus in this cycle. China Drop-In (12th May, 09:00 BST/16:00 SGT): Join our China and Markets economists for a 20-minute discussion about near to long-term economic challenges, from zero-COVID disruptions to US-China decoupling. Register now.

Latin America Data Response

Brazil Industrial Production (Mar.)

The 0.3% m/m increase in Brazilian industrial production in March suggests that the sector made a stronger contribution to GDP growth in Q1 than in Q4, and there are signs of further improvement in April. This supports our view that GDP growth this year will be stronger than most anticipate.

Latin America Data Response

Mexico GDP (Q1 Prov.)

The pick-up in Mexico’s GDP growth to 0.9% q/q last quarter was largely a result of a strong carryover from late 2021, and the economy was weakening sharply heading into Q2. As the headwinds from high inflation and weak US growth mount, we think that Mexico’s recovery will stay sluggish from here.

Latin America Data Response

Brazil IPCA-15 (Apr. 2022)

The jump in Brazilian inflation to 12.0% y/y in the middle of April, coming alongside the recent fall in the real, means Copom will almost certainly raise the Selic rate by another 100bp (to 12.75%) when it meets next week. We expect a further 75bp of hikes (to 13.50%) after that, which is a little more tightening than most currently anticipate.

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