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Mexico’s government will tomorrow auction rights to private companies to exploit oil reserves in the Gulf of Mexico – a move that marks the first step in opening up the country’s energy sector to private investment. In this Update we outline what to watch …
14th July 2015
The collapse in China’s stock market has rekindled fears over the outlook for its economy and led to renewed concerns about the spillovers to other EMs, including those in Latin America. As it happens, we continue to think that the worst fears about …
10th July 2015
The fall in Mexican industrial production in May was disappointing and almost certainly suggests that economic growth in Q2 will be even weaker than Q1’s lacklustre performance. That means the risks to our below-consensus GDP growth forecast for this year …
June’s inflation data from Mexico contain no signs that a weaker peso is fuelling price pressures. With inflation still below target, policymakers have room to keep interest rates low even if the Fed does start to raise rates later this year. … Mexico …
9th July 2015
The rise in inflation in Brazil to 8.9% y/y last month probably seals the deal for another 50bp hike in the benchmark Selic interest rate at this month’s COPOM meeting. Elsewhere, inflation in Chile surprised on the upside in June and this is likely to …
8th July 2015
Brazil’s political crisis has deepened over the past few weeks, with the latest testimonies in the so-called “car wash” probe bringing allegations of corruption at Petrobras a step closer to the door of President Rousseff. Financial markets have brushed …
6th July 2015
The 0.6% m/m increase in Brazil industrial production in May supports the message from last month’s PMI (released yesterday) that the economy could be nearing a bottom. We wouldn’t get too carried away by one month’s good data, but there are at least …
2nd July 2015
June’s manufacturing PMIs from Latin America were the proverbial mixed bag. The good news is that the pace of contraction in Brazil’s manufacturing sector seems to be easing. More ominously, the PMI in Mexico fell to a 12-month low. With the business …
1st July 2015
The big falls in global commodity prices are probably behind us but, in the absence of a renewedboom, the growth outlook for much of Latin America will remain depressed. … After the commodities boom – what next for Latin …
While many parts of the emerging and developed world are sweating over the potential fallout from a looming Greek exit from the Euro-zone, a deeper downturn in China remains the key external risk for Latin America. Fresh concerns over China’s outlook have …
30th June 2015
Activity data from Chile released today were a mixed bag – while retail spendingremained buoyant, industrial output fell sharply. All told, the recent run of softerdata means that our GDP Tracker is pointing to weaker growth in Q2 than in Q1. … Chile …
Argentina’s statistics office reported that GDP grew by 1.1% y/y in Q1, but independent data suggestthat although conditions have improved, there has not yet been a return to growth. And worryingly, thishas coincided with a fresh fiscal loosening and a …
29th June 2015
The Central Bank of Brazil’s Q2 Inflation Report gives the clearest indication yet that policymakersbelieve they have more work to do in the fight against inflation. We’ve pencilled in another 50bpincrease in the benchmark Selic interest rate to 14.25% …
26th June 2015
The changes announced by Brazil’s government to the central bank’s inflation target are small in thegrand scheme of things but reinforce the overall message that policymakers are serious about getting togrips with the country’s inflation problem. …
Markets in Latin America have shrugged off signs that the US Fed will begin to raise interest rates over the coming months. While most currencies have weakened in recent weeks, the falls have been modest and the Brazilian real has actually strengthened …
With Cristina Kirchner constitutionally barred from running for a third consecutive term as president of Argentina in October’s elections, hopes of a shift towards more market-friendly policymaking are building. In this Focus , we look at the runners and …
25th June 2015
The decision by Colombia’s central bank to leave interest rates unchanged at 4.50% last night was not a surprise – but what was more notable was that, given the economy’s large current account deficit, there was no explicit reference to the prospect of a …
Activity data from Mexico for April suggest that, after a weak Q1, the economy has continued to struggle at the start of Q2. In better news, inflation data to the middle of the month, also released today, showed that headline CPI is still below target. …
24th June 2015
Brazil’s economic data are going from bad to worse. Figures to the middle of this month suggest that inflation is now running at close to 9% y/y. Meanwhile, the central bank’s Economic Activity indicator fell sharply in April, adding to evidence that GDP …
19th June 2015
Chile is the only country in Latin America that has managed to reduce its current account deficit since the “Taper Tantrum” of 2013, which makes the economy less exposed to tightening external financing conditions as the Fed starts to hike rates. … A …
16th June 2015
The stronger-than-expected Peruvian economic activity data for April were encouraging and, while the monthly numbers are volatile, figures released over the past few months show a clear trend towards faster growth. … Peru Economic Activity …
15th June 2015
The slowdown in GDP growth in Colombia in the first quarter was not as bad as some had feared, but it was still a weak outturn. And with the full effects of the fall in oil prices yet to feed through, we expect the pace of growth to weaken further over …
12th June 2015
Interest rates in Chile and Peru were left unchanged last night and with both economies in the early stages of recovery, policymakers are likely to delay rate hikes until next year, even if the Fed does raise rates this year. Moreover, when rates do start …
The slowdown in annual industrial production growth in Mexico in April was due overwhelmingly to a renewed downturn in the mining sector. In contrast, there are tentative signs that the manufacturing sector is starting to find its feet. … Mexico …
11th June 2015
Several economies in Latin America have large current account deficits that could leave them vulnerable as and when the Fed starts to raise interest rates. The risks in Brazil are, by now, well known. But external positions in Colombia and Peru have also …
10th June 2015
The larger-than-expected rise in Brazilian inflation to 8.5% y/y last month was driven entirely by an increase in food inflation as well as regulated price hikes. Meanwhile, the infrastructure programme unveiled yesterday by the government is a step …
If there were any lingering concerns that the weaker peso might trigger a rise in inflation in Mexico, the fact that CPI fell to below its 3% target last month should quash them. This supports our long-held view that the central bank has plenty of room to …
9th June 2015
With Venezuela’s economic crisis intensifying, attention is starting to focus on how the country might get out of this mess. Two options have been suggested in recent weeks – one is the establishment of an orthodox currency board, and the other is …
The further decline in inflation in Chile last month means that the annual rate is now right on the upper bound of the target range, having spent over a year above the 4% threshold. The continued fall in inflation makes it increasingly likely that the …
8th June 2015
Elections in Mexico on Sunday delivered a broadly market-positive result, with the coalition led by the ruling PRI Party retaining its majority in Congress. But while this should ensure that Mexico avoids the kind of legislative gridlock that has hung …
The smaller-than-expected increase in Chile’s IMACEC activity indicator in April was almost entirely due to severe floods in the north of the country. Sharp falls in mining and construction, caused by the flooding, largely explain the soft outturn. … …
5th June 2015
The decision by Brazil’s monetary policy committee (COPOM) to raise interest rates by another 50bp to 13.75% was expected, but the fact that the accompanying statement was left unchanged from the last meeting – thus leaving the door open to further rate …
4th June 2015
We’re running out of words to describe just how bad conditions are in Brazil’s industrial sector. The fall in production in April means that industry has now contracted in five of the past six months and that output has returned to the same level it was …
2nd June 2015
May’s manufacturing PMIs from Latin America make for pretty gloomy reading, with the headline indices in both Brazil and Mexico edging down. It’s worth noting that neither series has been a particularly good leading indicator of activity in recent …
1st June 2015
Brazil’s economy contracted in Q1, but the decline was smaller than expected thanks to a large positive contribution from net exports. With the news from the real economy not quite as grim as had been expected, policymakers are likely to maintain their …
29th May 2015
Brazil’s government has started to flesh out plans for a fiscal squeeze, but further measures are likely to be needed if it is to meet its budget targets for this year. According to plans published earlier this month, the government will freeze just under …
28th May 2015
Following a brief recovery last month, Brazilian and Colombian financial markets have sold off in recent weeks, with both equities and currencies coming under pressure. But elsewhere in Latin America this month, the performance of financial markets has …
27th May 2015
The slowdown in Mexican GDP growth in the first quarter of this year was due almost entirely to weakness in industry, which has been affected by problems in the mining sector as well as softer growth in the US. The encouraging news is that the service …
21st May 2015
Brazil’s Economic Activity Indicator was up by 0.5% y/y in March – an improvement on the 4.1% y/y fall registered in February, but still consistent with a contraction in GDP of 1.5% y/y over Q1 as a whole. In quarterly terms, we think GDP contracted by …
Although annual GDP growth in Peru picked up in the first quarter of this year, in q/q terms growth eased a touch. Even so, we're not overly concerned – the quarterly data are volatile and, while the economy may have lost some momentum at the start of …
First quarter GDP data from Mexico, due to be released tomorrow, are likely to show that the economy made a sluggish start to the year, due in large part to continued weakness in the mining sector. Although there is no doubt that the plunge in oil prices …
20th May 2015
First quarter GDP and balance of payments data from Chile add to evidence that the economy is on the mend. Not only did quarterly GDP growth accelerate but the current account also registered a surplus for the first time in almost four years. … Chile …
18th May 2015
The fact that the timetable for rate “lift-off” in the US seems to have been pushed back in recent weeks has relieved pressure on policymakers in both Chile and Peru to follow suit and tighten policy. Our view remains that neither central bank will raise …
15th May 2015
The recovery that appeared to be underway in Latin America at the end of last year has faded in recent months, with several of the region’s economies experiencing renewed downturns. The latest slowdown has been concentrated in Latin America’s oil …
13th May 2015
Industrial production data for March were a bit softer than expected and suggest that Mexico’s economy grew by a disappointing 0.3% q/q or so in the first quarter. There are some signs that weather-related weakness in the US has started to weigh on …
12th May 2015
Brazil inflation edged up again last month but, with the big increases in regulated prices now over, it is probably close to peaking. Meanwhile in Chile, inflation continues to grind lower and should fall further over the coming months. … Brazil & Chile …
8th May 2015
It is, in truth, too soon to expect any improvement in Brazil’s public finances as a result of the belt-tightening measures introduced over the past few months, but the fact that the fiscal position has actually deteriorated underlines the scale of the …
7th May 2015
Annual inflation in Mexico held steady at 3.1% for the second consecutive month in April and the recent stabilisation of the peso against the dollar should help to ease fears that inflation will breach the central bank’s target range later on in the year. …
Brazil’s industrial sector contracted once again in March, meaning that output fell by around 2.3% in the first quarter of this year. Other sectors of the economy have fared slightly better in recent months, but even so it seems that GDP probably …
6th May 2015
