Dire Brazil data, tensions brewing in Argentina

Data released this week all-but-confirm that Brazilian GDP contracted in Q1 and it looks touch and go as to whether the economy entered a technical recession in Q2. Another fall in output this quarter would probably convince Copom to cut the Selic interest rate. Elsewhere, Argentine central bank Governor Guido Sandleris this week welcomed the fall in inflation from 4.7% m/m in March to 3.4% m/m last month, but he also hinted at brewing tensions with the government. These are only likely to grow as the government seeks to keep the peso more stable ahead of October’s election.