Latin America

Latin America Data Response

Latin America Data Response

Brazil Industrial Production (Oct.)

The surprise 0.6% m/m fall in Brazilian industrial production in October and weakness in the surveys for last month provide early evidence that the contraction in the economy last quarter may be followed by another q/q drop in GDP in Q4.

3 December 2021

Latin America Data Response

Brazil GDP (Q3 2021)

The 0.1% q/q fall in Brazilian GDP in Q3 confirmed that problems in the agricultural and industrial sectors tipped the economy into a technical recession. And with financial conditions tightening, the terms of trade worsening, and the threat from the new Omicron variant, the risks to our GDP growth forecast for next year of 1.3% are skewed firmly to the downside. Copom may temper its hawkish sentiment a bit at its meeting next week, with a 150bp hike (rather than 175bp) now looking more likely.

2 December 2021

Latin America Data Response

Brazil IPCA-15 (Nov. 2021)

The Brazilian inflation reading of 10.7% y/y in mid-November (the same as the October full month figure) provides the first sign that inflation is now stabilising. But with the headline rate still far above target and fiscal risks persisting, it looks more likely than not that Copom will raise the Selic rate in a larger 175bp step (to 9.50%) when it meets next month.

25 November 2021
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Latin America Data Response

Mexico Bi-Weekly CPI (Nov.)

The surge in Mexico’s inflation to 7.05% y/y in the first two weeks of November – the highest since 2001 – was partly a result of unfavourable base effects, but underlying price pressures were also relatively strong. We still think that the central bank will stick to its gradual pace of tightening with another 25bp rate hike, to 5.25%, at its December meeting but the chance of a more aggressive move is increasing.

24 November 2021

Latin America Data Response

Chile GDP (Q3 2021)

The 4.9% q/q surge in Chile’s GDP in Q3 took output not only above its pre-pandemic level but also its pre-crisis trend. The strength of the figures means that we now expect above-consensus growth of 12.0% this year (from 11.0%) and 4.0% next year. With increasing signs that the economy is overheating, the central bank will continue its aggressive tightening cycle in the coming months.

Latin America Data Response

Colombia GDP (Q3 2021)

The stronger-than-expected 5.7% q/q jump in Colombia’s GDP in Q3 more than offset the setback in Q2, and took output 2.6% above its pre-pandemic level. While the recovery will slow from here, we now expect above-consensus GDP growth of 9.5% in 2021 (from 8.5%) and 4.0% in 2022.

Latin America Data Response

Mexico Industrial Production (Sep.)

The surprise 1.4% m/m drop in Mexican industrial production in September in large part reflects auto sector woes and suggests that the flash Q3 GDP estimate of -0.2% q/q may be revised down. This release adds to our view that Banxico will opt for a modest 25bp hike in the policy rate (to 5.00%) when it meets later today.

Latin America Data Response

Brazil IPCA (Oct.)

The larger-than-expected jump in Brazilian inflation, to 10.7% y/y, last month, coming alongside a rise in inflation expectations and continued fiscal risks, increases the likelihood that Copom ups the pace of tightening (from the 150bp step in October) when it meets in early December.

10 November 2021
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