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Mexico may have received a (belated) reprieve from US tariffs this week, but some goods will still be subject to US duties now and there’s still the lingering uncertainty about whether Mexico will face tariffs on 2 nd April. Assuming Mexico faces a tariff …
7th March 2025
Period of strong growth comes to an abrupt end The sharp slowdown in Brazil’s GDP growth, to just 0.2% q/q, in the final quarter of last year confirms that the economy’s recent period of strong growth has come to an abrupt end. We now think the economy …
Another 50bp cut on the cards The rise in Mexico’s headline inflation rate, to 3.8% y/y in February was entirely driven by non-core inflation and therefore won’t be a major concern for the central bank. Indeed, we think that the weakness in the economy …
President Donald Trump's decision to grant a one-month exemption to the Big Three Automakers (Ford, GM & Stellantis) is something of a disappointment given the earlier heavy hints from his Commerce Secretary Howard Lutnick that more widespread relief was …
5th March 2025
The 25% tariff on all US imports from Mexico that came into force today will, if it stays in place, knock Mexico’s economy into recession in the coming quarters. A contraction in GDP this year of 1% would be plausible. And unlike Canada and China (also …
4th March 2025
The events of the past two weeks have called into question whether the US is severing ties not just with adversaries such as China but also allies, including Canada, Mexico and the European Union. This would radically alter the shape of the fractured …
President Donald Trump’s has claimed that there is “no room left’ for Canada and Mexico to avoid the imposition of 25% across-the-board tariffs at midnight tonight and he has reportedly signed a separate Executive Order raising the tariff rate on Chinese …
3rd March 2025
Mexico: tariffs loom (again) The coming days looks set to be dominated by tariffs, with President Trump (after some confusion around the timing) confirmed that the 25% tariff on Mexico (as well as Canada) will “indeed go into effect as scheduled” on …
28th February 2025
Argentina’s President Javier Milei has pledged to remove capital controls but we think that a major change in Argentina’s exchange rate setting before the mid-term elections in October is unlikely. And even then, our sense is that the removal of capital …
26th February 2025
Inflation jumps, Copom to deliver more tightening The jump in Brazil’s headline inflation rate to 5.0% y/y in the first half of February means Copom will almost certainly press ahead with another 100bp hike in the Selic rate to, 14.25%, at its March …
25th February 2025
Odds shifting in favour of another 50bp cut The fall in core inflation in Mexico in the first half of February combined with weak economic activity, means that Banxico is likely to press ahead with another 50bp cut at its meeting next month. The outturn …
24th February 2025
Colombia: lacklustre investment outlook GDP data from Colombia this week confirmed that 2024 was another very weak year for the economy. Growth came in at just 1.7% last year, far below the pre-pandemic average of 3+%. The one bright spot in the Q4 data …
21st February 2025
The decision by the US and Russia to “lay the groundwork” to end the war in Ukraine marks a potentially significant turning point after three years of conflict. Negotiations will take time and the macroeconomic implications will depend on the features of …
18th February 2025
Colombia’s economy strengthened at the end of last year, with GDP expanding at its fastest pace in more than two years. But the combination of tight fiscal and monetary policy, alongside lower oil prices, means that growth is likely to disappoint in 2025. …
Some major Latin American economies are among the most exposed to the steel and aluminium tariffs (Mexico and Brazil) and reciprocal tariffs (Argentina and Brazil) announced recently by US President Trump. But neither Brazil nor Argentina are heavily …
17th February 2025
Chile: BCCh turns hawkish The minutes to Chile’s monetary policy meeting in January published this week, at which interest rates were left unchanged at 5.0%, were surprisingly hawkish. Policymakers made very clear that they’re concerned that inflation …
14th February 2025
Fall in inflation won’t stop Copom from hiking again in March The fall in Brazil’s headline inflation rate in January, to 4.6% y/y, was mainly due a drop in housing inflation and is unlikely to prevent the central bank from delivering another 100bp hike …
11th February 2025
Mexico dodges tariffs… for now The world was convulsed at the start of the week by President’s Trump’s tariff threats on Canada and Mexico, which were postponed for 30 days through last minute deals whereby both countries pledged to beef up border …
7th February 2025
Argentina's President Javier Milei has made impressive progress in turning the economy around, but the key question now is whether these achievements can be sustained. Our EM team held this online briefing to discuss the work Milei still needs to do and …
6th March 2025
Banxico steps up easing as it adopts a more dovish tone Mexico’s central bank stepped up the pace of monetary easing to 50bp at today’s meeting, lowering the policy rate to 9.50%, and the overall communications were dovish. While a tariff-induced drop in …
6th February 2025
Ecuador’s presidential election on Sunday is set to be a tight race, with a second round run-off in April likely to be needed to separate the two leading candidates. Among the next government’s multiple challenges are improving the security situation and …
President Donald Trump’s eleventh-hour decision to delay the 25% tariffs he had threatened to impose on Canada and Mexico is a good reminder of his unpredictable nature. We don’t think Trump’s U-turn necessarily means he’s bluffing about other tariffs – …
5th February 2025
Trump hits Canada, China & Mexico with tariffs President Donald Trump’s decision to impose 25% tariffs on Canada and Mexico and an additional 10% tariff on China from this coming Tuesday, (with the only partial exemption for Canadian energy imports that …
2nd February 2025
Something’s coming… Latin America has been at the forefront of President Trump’s tariff latest threats. These included a (short-lived) announcement that he would slap punitive measures on Colombia, reports that the US will press ahead with a 25% import …
31st January 2025
GDP collapse argues for larger 50bp cut The much larger-than-expected 0.6% q/q drop in Mexico’s GDP in Q4 is likely to strengthen the argument for a 50bp interest rate cut, to 9.50%, at next week’s Banxico meeting. That now looks like the most likely …
30th January 2025
Copom sticks to its promise Brazil’s central bank delivered on its pledge to deliver another 100bp hike to the Selic rate, to 13.25%, and another 100bp increase at March’s Copom meeting is all but certain. For now, we are sticking with our view that that …
29th January 2025
Donald Trump’s return to the White House has sent jitters across the region, with Mexico most vulnerable to his tariff threats while Central American economies could be heavily impacted by his migration plans. Elsewhere in the region, the main impact will …
27th January 2025
This Update answers some key questions about the likely implications of the US imposing 25% tariffs against Canada and Mexico. Our current forecasts are based on the assumption of a 10% universal tariff and hence growing speculation about more aggressive …
The Trump administration’s first week has given policymakers in Latin America – and Mexico in particular – plenty to fret about. Unsurprisingly, migration has been a major focus for President Trump so far. His inauguration speech mentioned “returning …
24th January 2025
Inflation eases, but Copom still set to deliver 100bp hike next week Brazil’s headline inflation rate eased to 4.5% y/y in the first half of January, but signs that underlying price pressures continued to build mean that Copom will press ahead with …
We held an online briefing yesterday on Mexico’s economy and how it may be impacted by the Trump administration. (Listen to the on-demand recording here .) This Update answers some the key questions that came up. How do you interpret the threatened 25% …
23rd January 2025
Easing inflation makes February cut highly likely The fall in Mexican inflation in the first half of January, to 3.8% y/y, means that Banxico is likely to continue its easing cycle next month. But with the Fed set to pause its pause its cutting cycle and …
President Trump’s threats to retake ownership of the Panama Canal reflects its importance for US trade and the country’s strategic interests. It’s possible that these threats are simply another attempt to gain concessions, such as lower fees charged to …
The “America First Trade Policy” White House memorandum makes it clear that tariffs are coming, although we still have little clarity on the timing. There are some signs that a universal tariff could come later than in the second quarter as we have …
21st January 2025
Peso a Damocles sword over stabilisation process This week’s CPI data marked another victory for Argentinian President Javier Milei. Inflation came in at 2.7% m/m in December, the third consecutive sub-3% reading, prompting the government to announce a …
17th January 2025
The Shape of the Fractured World in 2025 The share of the fracturing global economy that is accounted for by China and its geopolitical allies contracted in 2024, leaving it under a third the size of the US bloc at the start of 2025. This fall was in part …
Mexico is arguably the most vulnerable economy to US trade protectionism. This in-depth analysis maps out economic and financial linkages between Mexico and its northern neighbour to provide a clearer sense of how tariffs would affect the economy and how …
15th January 2025
Mexico is once again bracing for trade protectionism in the US. And while it staved off tariffs in the first round of the trade war, on balance we don’t think it’s in as strong a negotiating position this time round. We’ve written extensively on what a …
14th January 2025
If Donald Trump were to impose a universal 10% tariff on US imports, we wouldn’t expect widespread reshoring of manufacturing production back to the US. And if it were accompanied by a 60% tariff on Chinese imports, the main beneficiaries would be other …
The Brazilian real plunged in 2024, due to fiscal risks. While we suspect that further piecemeal austerity measures will prevent another leg down in the currency, with investors’ fiscal fears unlikely to be fully addressed and Brazil’s terms of trade set …
13th January 2025
Trump has his eyes on the Canal When Donald Trump won the US election back in November, the last thing we thought we’d be writing about in this Weekly – just 10 days before his inauguration – was the Panama Canal. But the big news in the region this week …
10th January 2025
Copom to press ahead with more hikes despite fall in inflation The fall in Brazil’s headline inflation rate in December, to 4.8% y/y, coupled with the rebound in the real over the past couple of weeks, won’t be enough to stop Copom following through with …
Fall in inflation paves the way for further easing The larger-than-expected fall in Mexico’s headline inflation rate, to 4.2% y/y in December keeps the door open for another 25bp cut at Banxico’s February meeting. But a lot will hinge on moves on the …
9th January 2025
Brazil’s recent period of rapid growth is likely to come an end this year. Sovereign debt concerns will almost certainly rumble on, but further piecemeal austerity measures will probably prevent another rise in bond yields or leg down for the real. In a …
8th January 2025
The Cold War was defined by geopolitical blocs – the Soviet or Eastern bloc against the Western bloc. Geopolitics retreated with the collapse of the Soviet Union. The period from the early-1990s to the early-2010s was instead an era of globalisation: most …
7th January 2025
Donald Trump’s second term could redraw the global geopolitical map. A sustainable “Grand Bargain” with China, warmer relations with Russia, or a breakdown in the relationship between the US and its traditional allies could each reshape supply chains and …
Fall in inflation paves the way for further easing The fall in Mexican inflation in the first half of December, to 4.4% y/y, gives Banxico room to continue to ease monetary policy. But we expect Banxico to continue to cut in 25bp steps, rather than step …
23rd December 2024
Anatomy of a (self-inflicted) crisis Brazil this week was on the precipice of a crisis – if not in one already. The real continued to tumble, hitting a record low of 6.3/$ on Wednesday – down around 10% against the dollar since late October. 10-year local …
20th December 2024
Banxico cuts, but pace of easing unlikely to be stepped up Mexico’s central bank unanimously decided to deliver another 25bp interest rate cut, to 10.00%, at today’s meeting and the statement flagged that the easing cycle will continue in the coming …
19th December 2024
The region recorded robust growth in Q3 but we think that tight policy, worsening terms of trade and US trade protectionism will keep GDP growth in Latin America below consensus expectations in the coming years. Fiscal risks have intensified, in …
17th December 2024
