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Mexico’s exports holding up well … so far Figures out this week provided further evidence that Mexico's exports have been relatively resilient in the face of US import tariffs. Auto exports (compiled by local trade body AMIA) were down 3% y/y in May …
13th June 2025
The overnight strikes by Israel on Iran mark a major escalation in the conflict in the region and, with the oil market tighter than it was a few months ago, the risks to oil prices look more balanced than we’d previously thought (rather than skewed to the …
We'll be online discussing the outlook for Latin American economies and financial markets in an online briefing on Wednesday 18th at 10am ET/3pm BST . Sign up here . Overview – Mexico has emerged from the US’s shift to protectionism better than was feared …
12th June 2025
Colombia’s fiscal problems have returned to the spotlight amid rumours that the government will suspend the fiscal rule. This has triggered a sell-off in the bond market, but it doesn’t look like the deterioration in the fiscal situation has been fully …
10th June 2025
Inflation drops, but Copom likely to hike one final time next week The slightly larger-than-expected fall in Brazil’s headline inflation, to 5.3% y/y, was driven by weaker food inflation. Underlying price pressures continued to strengthen and, against …
Inflation rise won’t prevent further cuts from Banxico Mexico’s headline inflation rate jumped to 4.4% y/y in May but this was mainly driven by stronger non-core prices and so is unlikely to trouble officials at the central bank. Indeed, with the economy …
9th June 2025
Colombia: will the government deliver? The Colombian government’s fiscal plans due to be published next Friday will receive particular attention (and scrutiny) given the country’s increasingly fragile public finances – the latest monthly figures show that …
6th June 2025
Brazil’s monetary tightening cycle is very close to being (or may already be) over, and attention is quickly turning to when and how far Copom will lower interest rates. Historically, the market has tended to underestimate how far rates are lowered – and …
4th June 2025
A turning point for Mexico’s judiciary Mexicans head to the polls on Sunday to elect almost 900 federal judicial positions and thousands of positions at the local level. Roughly the same number of posts will be up for grabs in 2027. This huge …
30th May 2025
Bumper growth keeps door open for another rate hike The 1.4% q/q expansion in Brazil’s GDP was partly driven by a boom in the agricultural sector at the start of the year, which is likely to unwind. But it now looks like the economy is on course to expand …
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. Europe is being buffeted by geopolitical and geoeconomic shifts but, …
In this Update, we answer several key questions about how the US Court of International Trade (CIT) tariff ruling might affect the US and other economies. The outlook may now rest on the decision of the Republican-stacked Supreme Court. The upside risks …
29th May 2025
We doubt that the region’s strong start to the year will be sustained given the backdrop of lower commodity prices, tight policy and, in Mexico’s case in particular, uncertainty around US trade policy. Despite the recent dovish shift by many of the …
27th May 2025
Easing inflation increases chances of a hold at Copom’s June meeting The fall in Brazil’s headline inflation rate to 5.4% y/y in the first half of May means that the risks to our forecast for a final hike in June are skewed to the downside. But if the Q1 …
Copom: one final hike? Brazil’s Q1 GDP data due next Friday should show that the economy recorded strong growth in Q1, supporting the case for the central bank to deliver one final hike in this cycle. Having slowed sharply at the end of last year, …
23rd May 2025
Banxico looks set for another cut despite rise in inflation The larger-than-expected rise in Mexico’s headline inflation rate in the first half of May, to 4.2% y/y, was driven in large part by non-core components and is unlikely to sway Banxico’s …
22nd May 2025
The low public support for (left-wing) incumbents in many of Latin America’s largest economies, taken together with weak public finances, suggests that the wave of the upcoming elections could act as a catalyst for a rebound in (beaten up) financial …
21st May 2025
The proposed 5% US tax on remittance outflows would have a particularly large negative impact on Central American economies such as Honduras, Guatemala and El Salvador. Remittance flows could plausibly drop by around 1% of GDP in these countries. And …
A strong start to the year The stronger-than-expected 0.7% q/q expansion in Chile’s economy in Q1 on the back of robust domestic demand supports our view that Chile’s central bank will leave its policy rate on hold for a bit longer. But the recent dovish …
19th May 2025
Copom minutes intensify debate over June meeting The minutes to the Brazilian central bank’s monetary policy meeting last week, at which the Selic rate was hiked by 50bp, have added further fuel to the debate over whether the tightening cycle is already …
16th May 2025
Growth concerns leave the door open for another 50bp cut in June Mexico’s central bank (Banxico) lowered its policy rate by another 50bp, to 8.50%, at today’s meeting and the accompanying communications underlined that policymakers’ concerns have shifted …
15th May 2025
The impressive progress made by Argentina’s President Javier Milei towards restoring macro stability should set the scene for stronger and less volatile growth than in the past 10-15 years. But we think the analyst consensus has turned too optimistic on …
The recent climbdown has left the effective US tariff rate on the rest of the world at around 15% as opposed to the 27% which was threatened at the height of this year’s trade war. While this is still the highest since the 1930s, it is unlikely to cause a …
13th May 2025
The latest survey data out of Mexico have been woeful and, while high-frequency hard data suggest that activity hasn’t fared as badly as might have been feared, the bigger picture is that the economy is very weak. This is likely to weigh heavily on …
Global Trade Stress Monitor …
The US and China have each suspended for 90 days all but 10% of their Liberation Day tariffs and cancelled other retaliatory tariffs. This is a substantial de-escalation. However, the US still has much higher tariffs on China than on other countries and …
12th May 2025
Lower oil prices a mixed blessing The announcement from OPEC+ over the weekend that it will increase oil supply further in June briefly caused the price of Brent crude to drop below $60pb. It has since recovered to c.$63pb at the time of writing, but that …
9th May 2025
Brazil’s current account deficit has widened sharply over the past twelve months and we think it could reach 4.0-4.5% of GDP over the next couple of years. This leaves the real vulnerable to renewed falls, especially if concerns about the health of the …
8th May 2025
Inflation rises, but Banxico still on course for a 50bp cut next week Mexico’s headline inflation rate edged up to 3.9% y/y in April, but we think that the challenging growth outlook and the relative resilience in the peso leave the door open for another …
Copom hikes again, but tightening cycle near an end (if not already over) Brazil’s central bank hiked the Selic rate by a further 50bp, to 14.75%, today and officials made clear in the accompanying statement that the tightening cycle is near an end. We …
7th May 2025
Hold in Chile, BanRep turns dovish Andean central banks sent very different signals this week. In Chile, the central bank left its policy rate unchanged at 5.00% as expected. And policymakers still sounded somewhat concerned about inflation, highlighting …
2nd May 2025
Weak economy argues in favour of another 50bp cut The 0.2% q/q expansion in Mexico’s GDP means that the economy dodged a technical recession last quarter. But growth was driven by a rebound in agriculture and the rest of the economy – and the …
30th April 2025
Mexico is well positioned to benefit if punitive US tariffs on China prompt a shift in US import demand towards other EMs, as seems likely, although its ability to ramp up exports in the near term will be constrained by some capacity constraints, …
28th April 2025
The IMF’s decision to pause Colombia’s access to its flexible credit line is not particularly concerning given the country’s robust external position, but the Fund has shone the spotlight back onto the country’s fiscal problems. With general elections …
Mexico: growth worries points to another 50bp cut Hard and soft activity data out of Mexico over the past few weeks paint a picture of a struggling economy. Admittedly, the IGAE index rebounded by 1.0% m/m in February. But that came after contractions in …
25th April 2025
Inflation rises but end of tightening cycle is near The further rise in Brazil’s headline inflation rate to 5.5% y/y in the first half of April means that Copom will press ahead with a 50bp hike in the Selic rate at its next meeting in early May. But …
Inflation rises, but Banxico more focussed on weak economy The rise in Mexico’s headline inflation rate in the first half of April, to 4.0% y/y, is unlikely to shift Banxico’s focus away from the weakness of the economy and we expect it to deliver another …
24th April 2025
Argentina: a step in the right direction It’s been a busy week for Argentina. Following the announcement of a fresh $20bn IMF deal over the weekend, authorities announced that from Monday a raft of capital controls would be eased and Argentina would move …
17th April 2025
Latin America generally got off lightly on ‘liberation day’, but the indirect effects on confidence and, more importantly, demand from China could be larger. Meanwhile, the sell-off in the region’s currencies amid the recent turmoil in financial markets …
15th April 2025
Argentina’s latest IMF programme and the move to partially dismantle some capital controls and liberalise the exchange rate suggests policymakers are moving more quickly than we’d anticipated to restore macro orthodoxy. The parameters of the exchange rate …
14th April 2025
Inflation rises again, Copom to deliver a bit more tightening The jump in Brazil’s headline inflation rate to 5.5% y/y in March looks set to be followed by further increases towards 6% y/y over the coming months. Copom will almost certainly deliver a bit …
11th April 2025
Argentina & the IMF – 23 rd time lucky? The IMF announced this week that it had reached a Staff-Level Agreement with Argentina on a 48-Month Extended Fund Facility totalling $20bn – if approved, it would be the 23 rd IMF deal in Argentina’s fraught …
President Trump’s trade war has created material downside risks for the global economy. Our forecasts assume that tariffs on most countries outside China will stay at 10% and retaliation by other governments will be moderate. In this scenario, global GDP …
10th April 2025
The troubles at Brazilian bank Banco Master that have grabbed the headlines recently seem to be contained and, by most measures, the banking sector as a whole appears to be in good shape. But there has been a sharp run-up in lending to households over the …
Dodging large tariffs Governments across Latin America are likely to be breathing sighs of relief following US President Trump’s tariff announcement on Wednesday. Mexico will remain subject to the duties announced through March which contained large …
4th April 2025
We hosted two online Drop-In sessions on 3 rd April to discuss the fallout from President Trump’s Liberation Day tariff announcement. (See a recording here .) This Update contains answers to some of the questions that we received and links to several more …
3rd April 2025
Mexico got off lightly from the tariffs announced by President Trump yesterday and the overall hit to the economy from US trade measures may be a bit smaller than we’d initially thought. Even so, we think growth will be very modest this year, perhaps just …
The blowout in Mexico’s budget deficit to its largest level since the 1980s last year means that the government has little scope to offset the hit to the economy from US tariffs. There’ll probably be some slippage on the government’s plans to rein in the …
31st March 2025
The US would have to exert a lot of pressure to coerce most major countries into putting large tariffs on goods from China . Curtailing trade with China would have an economic cost and even countries that have closer economic ties with the US would still …
In a further escalation of his trade war, US President Trump on Wednesday announced a 25% tariff on assembled motor vehicles and some key components: engines and engine parts, transmissions and powertrain parts, and electrical components. (See our initial …
28th March 2025
