It’s been a noisy week in Brazilian politics but, while the chances of some kind of pension reform being approved this year have risen, we think the fiscal savings will be smaller than many are anticipating. Elsewhere, although Argentina’s current account deficit narrowed further in Q1, it is likely to widen again as the economy recovers. Finally, the statement accompanying this week’s Mexican central bank meeting suggest that policymakers are slowly coming round to the idea of interest rate cuts. We continue to expect more easing than the markets are pricing in over the next year.
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