Brazil IPCA (May)

The further jump in Brazil’s headline inflation rate last month, to 8.1% y/y, makes a 75bp hike in the Selic rate (to 4.25%) next week certain and Copom will probably signal that another 75bp hike is on the cards at the subsequent meeting in August.
William Jackson Chief Emerging Markets Economist
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Latin America Economics Weekly

Closer look at Lula, auto sector U-turn?

There have been some recent clues that Brazil’s former left-wing president Lula, the current favourite to win October’s election, may not be as radical as some fear. But there is still a clear risk that he would backslide on key economic reforms. Otherwise, the encouraging recoveries in auto production in Brazil and Mexico tallies with broader evidence that global goods shortages began to ease towards the end of 2021. Unfortunately, the recent surge in Omicron cases globally risks putting a spanner in the works as supply chains may face renewed disruption.

14 January 2022

Latin America Economics Update

Argentina & the IMF: deal or no deal?

Although the Argentine government and the IMF do not fully see eye-to-eye, there have been signs of progress in negotiations and we think it’s most likely that they will sign a fresh agreement within the next few months. That would probably give some relief to bondholders in the near term. But we remain sceptical that a new IMF deal would be enough to fix Argentina’s economic issues over the coming years. Drop-In: Neil Shearing will host an online panel of our senior economists to answer your questions and update on macro and markets this Thursday, 13th January (11:00 ET/16:00 GMT). Register for the latest on everything from Omicron to the Fed to our key calls for 2022. Registration here.  

12 January 2022

Latin America Data Response

Mexico Industrial Production (Nov.)

The disappointing 0.1% m/m fall in Mexican industrial production in November raises the chances that the economy slipped into a recession last quarter. And while auto production looks to have rebounded strongly in December, the supply disruptions may continue to keep industry weak in Q1.

11 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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