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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
The month-on-month fall in Chile’s IMACEC activity indicator in March was due largely to severe floods in the north of the country, which disrupted activity and led to the temporary closure of many mines. This weather-related weakness will prove …
5th May 2015
The recovery that was seemingly underway in most parts of Latin America towards the end of last year appears to have faltered in recent months. Indeed, our proprietary GDP Tracker suggests that the region grew by just 0.5% y/y in the first quarter, down …
30th April 2015
Calling turning points is always tricky but, assuming that the real remains stable over the coming months, we think that last night’s 50bp increase in Brazilian interest rates to 13.25% could be the last in the current tightening cycle. … Brazil hike …
The raft of weak activity data for Chile, while disappointing, are unlikely to have prevented a robust expansion of GDP in Q1. We suspect that much of last month’s weakness can be explained by the severe floods in the north of the country. … Chile …
29th April 2015
Following an extended period of weakness, it appears that Latin America’s currencies have finally started to find their feet. Most have been broadly flat against the dollar so far this month, while the Brazilian real and the Colombian peso have both …
28th April 2015
Some of the structural constraints that have held back manufacturing in Brazil over the past decade now appear to have eased. So while we don’t expect an imminent turnaround in the sector, or an Asian-style industrial boom over the medium-term, there are …
27th April 2015
Interest rates in Colombia were left unchanged at 4.50% on Friday night and above target inflation and a large current account deficit limit the room for monetary easing to counter slowing economic growth. There may be a window for some small rate cuts …
The pick-up in retail sales growth in February suggests that consumer spending in Mexico has strengthened in the early months of this year, even if problems in the mining sector have weighed on wider economic growth. … Mexico Retail Sales …
24th April 2015
Activity data from Mexico for February were a little weaker than expected and leave the economy on course to grow by a relatively sluggish 2.5% y/y in the first quarter of the year. There is better news on the inflation front, however, with data to the …
23rd April 2015
Our Argentina Activity Indicator (AAI) suggests that conditions in the economy have stabilised following sharp falls in output last year, but the best we can say is that GDP is stagnating – there is no sign yet of a return to growth. And while we wouldn’t …
Changes to the methodology that Brazil uses to produce its balance of payments data have resulted in an even larger current account deficit. However, the impact on financial markets – and the currency in particular – is likely to be small. The new data …
22nd April 2015
