Brazil Industrial Production (May)

The 1.4% m/m rise in Brazilian industrial production in May only partially reversed the falls in output in the three preceding months. And while surveys point to a stronger reading in June, the sector was probably a drag on q/q GDP growth over Q2 as a whole.
William Jackson Chief Emerging Markets Economist
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Latin America Data Response

Brazil IPCA-15 (Jan. 2022)

The stronger-than-expected Brazilian mid-month inflation reading for January, of 10.2% y/y, means that the central bank is on course to hike the Selic rate by another 150bp (to 10.75%) next Wednesday. That said, with inflation now past its peak and likely to fall in the coming months, policymakers may signal that the pace of tightening will slow at the subsequent few meetings.

26 January 2022

Latin America Chart Book

Some good news on the political front

Political risk will be a major theme once again in Latin America this year, although recent developments have given cause for cautious optimism. Chilean President-elect Boric’s appointment of Mario Marcel, the current Central Bank Governor, as the next Finance Minister signals that his government may pursue prudent fiscal policies. And in Brazil, former left-wing president Lula (the front-runner in the presidential race) may be moderating his stance, having mooted to have asked Geraldo Alckmin, previously Lula’s centre-right rival, to be his running mate. However, there are still lingering risks in the region. Argentina’s government continues to play hardball with the IMF as the clock ticks down to reach a new deal. The make-up of Chile’s new constitution remains uncertain. And fiscal discipline could still waver around elections in Brazil and Colombia. These risks, and the implications for public debt trajectories, will probably put renewed pressure on currencies across Latin America.

25 January 2022

Latin America Data Response

Mexico Bi-Weekly CPI (Jan.)

The fall in Mexico’s inflation to 7.1% y/y in the first two weeks of the year gave the first sign that inflation has peaked and we think that it will continue to trend lower over the coming months. That said, the further rise in core inflation, to 6.1% y/y, will be a concern for the central bank, suggesting that it will deliver another 50bp rate hike, to 6.00%, at its meeting next month.

24 January 2022

More from William Jackson

Latin America Data Response

Brazil & Chile Consumer Prices (Jun.)

The further rise in Brazilian inflation, to 8.3% y/y, means Copom will continue to hike when it meets next month. But the data are not quite enough to prompt a shift from 75bp hikes to a larger 100bp move. Meanwhile, with Chilean core inflation continuing to run above target and optimism about the economy growing, we now think the central bank will start its tightening cycle when it meets next week.

8 July 2021

Emerging Europe Data Response

Russia Consumer Prices (Jun.)

The further rise in Russian inflation to a stronger-than-expected 6.5% y/y in June means the central bank (CBR) is likely to up the pace of tightening when it meets in a couple of weeks. A 75bp hike (to 6.25%) seems most likely, but the probability of an even larger 100bp hike has risen.

7 July 2021

Emerging Markets Economics Update

EM credit growth: where do the risks lie?

With the (usual) exception of Turkey, the strong rates of credit growth seen in some EMs including Brazil and Korea are unlikely to be sustained as policymakers have already started (or will soon turn to) tightening policy. The bigger concern is the extreme weakness of credit growth in other EMs such as Mexico and the Philippines, which threatens to further hold back economic recoveries.

6 July 2021
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