Worrying signs from Castillo, regional re-opening

The first steps from Peru’s newly-inaugurated President, Pedro Castillo, provide plenty of worrying signs for investors and suggest that local financial markets will remain on the back foot. Meanwhile, with virus numbers coming down across much of the region, most economies are re-opening to varying degrees and near-term economic prospects are brightening. Mexico is the key exception.
Nikhil Sanghani Emerging Markets Economist
Continue reading

More from Latin America

Latin America Economics Weekly

Argentina’s PASO surprise, Pemex debt

The loss for Argentina’s ruling Peronists in the open primary (PASO) for mid-term legislative elections in November suggest that the political tides might be shifting and boosted local financial markets. But the country’s public debt problems are likely to re-surface before too long. Meanwhile, the news that Mexico’s government has purchased $7bn of foreign exchange from the central bank appears to be another step towards the state taking greater responsibility for Pemex’s debt problems.

17 September 2021

Latin America Economics Update

Is high inflation here to stay in Latin America?

Following a surge in inflation across the region this year, we think that headline rates are at, or close to, a peak in major Latin American economies. But strong underlying price pressures will prevent inflation from falling below central banks’ targets over the next year or so. Monetary tightening cycles therefore have a lot further to run across the region, especially compared to elsewhere in the emerging world.

15 September 2021

Latin America Economics Weekly

Brazil’s political crisis, Mexico’s austere budget

It’s been a rollercoaster week in Brazilian politics and financial markets and, while investors have breathed a small sigh of relief in the past day or so, we think that they will be put under further pressure as the 2022 election nears. Elsewhere, Mexico's austere 2022 budget unveiled this week suggests that fiscal policy will continue to do very little to support the economy, which reinforces our view that Mexico's recovery will underperform most of its regional peers.
CE Spotlight 2021: The Rebirth Of Inflation? We’re holding a week of online events from 27th September to accompany our special research series. Event details and registration here.

10 September 2021

More from Nikhil Sanghani

Latin America Economics Weekly

Mexico’s Delta despairs, Bolsonaro’s giveaways

The third virus wave currently underway in Mexico, driven by the contagious Delta variant, will probably weigh on activity this quarter. But, for now, we don’t think that it will derail the economic recovery. Elsewhere, the falling popularity of Brazil’s President Bolsonaro and the spectre of impeachment seems to have bolstered the president’s demands for higher public spending. This could be a running theme in the run-up to next year's election, suggesting that fiscal risks will intensify once again.

23 July 2021

Latin America Data Response

Mexico Bi-Weekly CPI (Jul.)

The small fall in Mexico’s headline inflation to 5.8% y/y in the first half of July was mainly due to fuel inflation dropping back, while the core rate remained stubbornly high at 4.6% y/y. The central bank has now shown that it will act to clamp down on above-target inflation suggesting that another 25bp rate hike, to 4.50%, is likely at its next meeting in August.

22 July 2021

Latin America Economics Update

Chile: start of a long but gradual tightening cycle

Chile’s central bank fired the starting gun on a gradual tightening cycle yesterday as it hiked its policy rate by 25bp, to 0.75%. While it signalled that monetary policy will remain accommodative over the next two years, we think that Chile’s strong economic recovery will prompt the central bank to raise the policy rate to its neutral level, at 3.25%, by the end of next year.

15 July 2021
↑ Back to top