Latin America

Latin America Economics Update

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 Economics Update

Latin America: five key calls for 2022

We think that Latin American GDP growth will slow by more than most expect in 2022, while inflation will also drop more a bit more quickly than the consensus anticipates. This feeds into our relatively dovish monetary policy views across the region. Meanwhile, heightened political and/or fiscal risks, alongside falling commodity prices, will cause the region’s currencies to weaken further against the US dollar.

10 January 2022

Latin America Economics Update

Chile’s election: first thoughts on Boric’s victory

Gabriel Boric’s victory in Chile’s presidential election is another sign that the country is moving towards greater state intervention in the economy. A radical shift in policymaking seems unlikely. But the public debt-to-GDP ratio looks set to rise much further under the new government. This, and lingering uncertainty over the new constitution, will probably keep local financial markets under pressure.

20 December 2021
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Latin America Economics Update

Banxico starting to act tough on inflation

Banxico added to this week’s global central banking bonanza with a surprise 50bp hike, to 5.50%, and the widespread hawkish shift on the Board suggests that policymakers will act more aggressively to tame above-target inflation. We now expect a further 200bp of hikes, to 7.50%, next year (previous 6.00%).

Latin America Economics Update

Chile’s central bank takes another hawkish step

Chile’s central bank raised its policy rate by another 125bp yesterday, to 4.00%, and the accompanying statement, alongside today’s Monetary Policy Report, suggest that its tightening cycle will be more aggressive than we’d previously thought. We now expect a further 200bp of hikes by the middle of next year to 6.00% (previous 5.00%) – that’s higher than most analysts currently anticipate. Note: Central Bank Drop-In – The Fed, ECB and BoE are just some of the key central bank decisions expected in this packed week of meetings. Neil Shearing and a special panel of our chief economists will sift through the outcomes on Thursday, 16th December at 11:00 ET/16:00 GMT and discuss the monetary policy outlook for 2022.

Latin America Economics Update

Lat Am’s recovery falling behind other EMs

The recent batch of GDP figures showed that growth in Latin America as a whole picked up in Q3, but the region’s recovery so far has been one of the weakest in the emerging world. And growth prospects are only deteriorating, suggesting Latin America will fall even further behind in the coming quarters. Note: Central Bank Drop-In – The Fed, ECB and BoE are just some of the key central bank decisions expected in this packed week of meetings. Neil Shearing and a special panel of our chief economists will sift through the outcomes on Thursday, 16th December at 11:00 ET/16:00 GMT and discuss the monetary policy outlook for 2022.

Latin America Economics Update

Brazil: chunky rate hikes to go on despite recession

Brazil’s central bank gave a clear steer that, even though the economy entered recession in Q3 and shows little sign of growth in Q4, it will follow the 150bp hike in the Selic rate yesterday (to 9.25%) with further aggressive tightening. We now think that the Selic rate will reach 11.50% by early 2022.

Latin America Economics Update

Red-hot Chile set to cool

Chile’s economy has been operating above potential for several months but there are signs that activity is starting to cool. And policy tightening, falls in copper prices and the possibility of more stringent virus restrictions in light of the Omicron variant mean that growth will slow sharply over the coming quarters.

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