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Brazil’s electoral court has reconvened this week to rule on whether illegal campaign donations made during the 2014 presidential election invalidate the Rousseff-Temer ticket. In this Update, we answer six key questions, including what it might mean for …
6th June 2017
The deepening crisis in Venezuela could have significant spillovers to some Central American and Caribbean countries such as Nicaragua and Cuba. But the impact on larger countries in the region, including Brazil, Argentina and neighbouring Colombia, is …
Having contracted in February and March on the back of a copper mine strike, Chilean economic activity returned to growth in April and we think the economy should continue to recover over the coming months. However, the weak start to the year means that …
5th June 2017
Survey data from Mexico strengthened markedly in May and are now generally back to their levels prior to Trump’s election victory in November. Elsewhere, the latest survey data from Brazil continue to paint a picture of gradual economic recovery. … Mexico …
2nd June 2017
The 0.6% m/m increase in Brazilian industrial production was better than expected, but only partly reverses the steep drop recorded in March. As things stand, it is difficult to envisage the sector making another significant contribution to GDP growth in …
The 1.0% q/q rise in first quarter GDP means that, after having contracted for eight consecutive quarters, Brazil has finally exited recession. While our GDP forecast for this year is still above consensus, the recovery will be stop-start. The monthly …
1st June 2017
Brazil’s financial markets sold off sharply in the immediate aftermath of the latest corruption allegations against President Temer, with equities, the currency and bonds all coming under pressure. Markets have since stabilised, but one notable …
26th May 2017
The economic data from Latin America have continued to improve over the past month, but this has been overshadowed by developments on the political front. The scandal that has engulfed Brazil’s government has taken centre stage and, while there are still …
25th May 2017
Mexican inflation continued its upward trend in the first half of May, hitting an eight-year high of 6.2% y/y, but the recent stability of the peso means it probably doesn’t have much further to rise. … Mexico Bi-Weekly CPI …
24th May 2017
The outlook for Latin America is improving and we expect economic growth to accelerate over the next year. The latest political crisis to engulf Brazil has cast fresh doubts over the outlook there but the early signs suggest that this is unlikely to …
23rd May 2017
It’s still too soon to say how Brazil’s latest political drama will play out, but the key point for the economy is that the crisis has not yet caused a sharp tightening in financial conditions. … Brazil: no signs (yet) of major tightening in financial …
22nd May 2017
The sharp slowdown in Colombian GDP growth in Q1 was due in part to a 3%-pt hike in VAT at the start of this year. We expect Q1 to be the bottom, but the risks to our below-consensus GDP growth forecast for this year now lie to the downside. … Colombia …
19th May 2017
Chile’s central bank cut its policy interest rate by another 25bp, to 2.50%, but with the economy showing tentative signs of recovery, we think the easing cycle is over for now. We expect the policy rate to remain on hold for the rest of this year and all …
Chile’s economy narrowly avoided entering a technical recession in Q1 and, while growth has all but ground to a halt in recent quarters, there are tentative signs of a recovery. Meanwhile, the current account deficit remained broadly in check. … Chile GDP …
18th May 2017
Allegations that Brazilian president Michel Temer endorsed bribes to buy the silence of former house speaker, Eduardo Cunha, has dealt a fresh blow to the government’s reform agenda. The real and bond markets are likely to sell-off when they open later …
We have just returned from a week of meetings with investors and local contacts in Mexico City. In this Update we summarise four quick takeaways. … Mexico: Notes from the …
15th May 2017
March activity data confirmed that Peru’s economy slowed sharply in Q1 and, while growth should pick up over the coming months as the temporary drag from severe floods eases, the weak start to the year means we are revising down our GDP growth forecast …
Mexican industrial production continued to broadly stagnate in March, but this is still far from the collapse that the survey data are pointing to. Indeed, if anything, today’s data suggest that the robust provisional estimate of Q1 GDP growth might be …
12th May 2017
The Central Reserve Bank of Peru’s decision to cut its policy interest rate by 25bp, to 4.00%, took most analysts by surprise, but not us. We expect one further 25bp cut, to 3.75%, over the coming months, although we don’t think that this marks that start …
The collapse in Brazilian inflation to a decade-low of 4.1% y/y in April paves the way for another 100bp cut in the Selic rate (to 10.25%) at the next COPOM meeting on 31 st May. … Brazil Consumer Prices …
10th May 2017
President Macri has made solid progress in tackling Argentina’s economic vulnerabilities over the past eighteen months but reform momentum more recently has slowed. With legislative elections scheduled for October, we suspect that progress on two key …
9th May 2017
Mexican inflation continued to rise in April and, with inflation expectations starting to tick up again, we think the central bank is likely to opt for another 25bp hike in its policy interest rate, to 6.75%, at its meeting later this month. … Mexico …
Chilean inflation remained weak at 2.7% y/y in April, but even so, with the economy finally showing tentative signs of picking up, the central bank is likely to pause its easing cycle at next week’s policy meeting. … Chile Consumer Prices …
8th May 2017
Chilean economic activity data for March suggest that the economy avoided entering a technical recession in Q1, albeit only by the smallest of margins. And there are tentative signs that the economy may finally be turning the corner. … Chile IMACEC …
5th May 2017
Despite mounting public opposition, President Temer’s reform agenda is inching ahead in Brazil. Labour market reforms have passed the lower house, but the real test lies ahead with pension reform. The pension bill is now out of committee but the race is …
4th May 2017
April’s survey data point to a continued improvement in Brazil’s economy at the start of Q2, while in Mexico they suggest conditions have deteriorated further. But with provisional Q1 GDP data for Mexico defying the dire survey data and revealing that …
3rd May 2017
March’s industrial production data from Brazil were ugly, but according to our estimates the sector still made a positive contribution to GDP growth over Q1 as a whole. … Brazil Industrial Production …
There is now broad agreement in financial markets that interest rates in Brazil will fall into single digits this year, but keeping them there will require the “neutral” or “structural” level of interest rates in the economy to fall. This in turn will …
2nd May 2017
First quarter GDP data from Mexico confirmed what we have long suspected – that the survey data have been overstating the weakness in the real economy. In fact, the economy grew at a reasonably healthy rate in Q1 and, despite the lingering risks on NAFTA, …
28th April 2017
Latin America’s economy has strengthened in the early months of this year – in fact, our GDP Tracker suggests that year-on-year growth returned to positive territory in Q1 for the first time since mid-2015. However, the recovery has so far been uneven. …
26th April 2017
Moves in Latin America’s currency and equity markets this month have been relatively small but the divergent paths of government bond yields have been more eye-catching. While short-term local currency yields have fallen in Brazil, Chile and Colombia as …
24th April 2017
Mexican inflation continued to rise in the first half of April, hitting a fresh seven-year high of 5.6% y/y. That being said, the stability of the peso over recent weeks means it’s probably close to peaking. Meanwhile, economic activity data for February …
Our latest Banking Heat Map shows that, while Latin America’s credit bubbles have continued to deflate, this doesn’t yet appear to have triggered widespread problems in the region’s banking sectors. Non-performing loans remain low and have even started to …
20th April 2017
Data to mid-April showed that Brazilian inflation has fallen below the BCB’s central target for the first time in almost seven years. We expect it to fall further over the coming months, before bottoming out in July/August. … Brazil IPCA-15 …
Rising food inflation is likely to dissuade Peru’s central bank from cutting its policy interest rate for the time being. But with the economy slowing and core price pressure low, an easing of monetary policy is likely when the impact of recent floods on …
18th April 2017
February’s industrial production data from Mexico were soft by most standards, but there is still no sign of the outright collapse that has been suggested by the recent business surveys. Indeed, as things stand, industry looks likely to make a small …
11th April 2017
The collapse in Mexico’s main business surveys and a number of confidence indices since President Trump’s election victory in November has been alarming, but it hasn’t yet been accompanied by a weakening in the hard data. As such, while we think the …
10th April 2017
Brazilian export growth looks set to rebound this year as the impact of last year’s drought on agricultural shipments fades. This should help to finally pull the economy out of recession. That being said, the substantial rally in the real over the past …
Mexican inflation hit a fresh seven-year high of 5.4% y/y in March, up from 4.9% y/y in February, but the recent rebound in the peso means that it is probably now close to peaking. Much still depends on the currency, but assuming that it remains broadly …
7th April 2017
The latest drop in Brazilian inflation leaves it only a whisker above the BCB’s central target and probably seals the deal on a larger 100bp cut in interest rates at next week’s Copom meeting. … Brazil & Chile Consumer Prices …
Peru’s central bank kept its policy interest rate on hold at 4.25% and, while the accompanying statement struck a dovish tone, the risk of a surge in inflation means rate cuts are unlikely. That said, with the economy likely to have weakened further in …
Venezuela has hit the headlines for all the wrong reasons over the past week, with the Supreme Court first annulling the National Assembly before then partly reversing its decision. However, a change in the so-called “Hydrocarbons Law” has slipped under …
6th April 2017
The contraction in Chilean economic activity in February largely reflects a strike at the country’s largest copper mine, which has now come to an end. But the rest of the economy also weakened and today’s data all but confirm the economy entered a …
5th April 2017
Brazil’s beleaguered government will have to fight major challenges on at least three fronts over the coming months. As things stand, there appears to be a way forward for the government on each of them and our central scenario remains that it muddles …
The latest batch of survey data suggests that Brazil’s economy continued to recover in March, while in Mexico the recent slump in the IMEF business surveys is starting to reverse. … March survey data strike more positive tone in Brazil and …
4th April 2017
The 0.1% m/m rise in Brazilian industrial production in February was smaller than expected but still leaves the sector on course to make a positive contribution to GDP over Q1 as a whole. … Brazil Industrial Production …
Opinion polls suggest that the outcome of Ecuador’s presidential election on Sunday is still too close to call. A victory for government candidate Lenin Moreno would mean more of the same leftist economic policies as under current president Rafael Correa. …
31st March 2017
A leaked copy of a notification letter from the Trump administration to Congress suggests that its plans for renegotiating NAFTA are more consistent with the idea of creating a “North American manufacturing powerhouse” than they are with imposing severe …
The scandal over Brazil’s meat sector, which at one point appeared to threaten the country’s economic recovery, seems to have faded just as quickly as it escalated. The crisis exploded following the revelation earlier this month that the authorities had …
28th March 2017
The proposed spending cap on Argentina’s provincial governments is a positive step and could in theory narrow the overall public sector budget deficit by almost 1% of GDP by 2019. However, it’s not clear how the spending cap will be enforced. More …
23rd March 2017
