Filtered by Subscriptions: Latin America Economics Use setting Latin America Economics
The writing is on the wall for Venezuela as falling oil prices exacerbate severe strains in the balance of payments. Both the government’s ability and willingness to service its foreign currency debt will be tested over the coming months, and we continue …
28th November 2014
The 0.1% q/q increase in Brazil GDP in Q3 means that the economy has limped out of recession, but the weakness of growth underlines the scale of the challenge facing the new team of economic policymakers unveiled yesterday. … Brazil GDP …
The announcement of a new economic team in Brazil – and the nomination of Joaquim Levy as Finance Minister in particular – will strengthen hopes for a return to more orthodox policies during President Rousseff’s second term in office. But while fiscal …
27th November 2014
Having increased steadily over the course of this year, there are signs that inflation in both Brazil and Mexico has now peaked. Data to the middle of November suggest that it should drop back in both countries this month, and further falls seems likely …
Strong government spending drove a small pick-up in Peru’s GDP growth in the third quarter. But the bigger picture is that most other parts of the economy remained weak. … Peru GDP …
25th November 2014
Most of the region’s currencies have continued to depreciate against the US dollar so far this month, extending a period of weakness that began back in August. Looking ahead, while we think that the big falls in currencies are now behind us, we do expect …
24th November 2014
Mexican GDP growth accelerated to its fastest pace since 2012 in the third quarterand, with demand from the US set to strengthen, we expect the economy to continueto build momentum over the coming quarters. As a result, Mexico should be theregion’s stand …
21st November 2014
The further decline in Brazilian inflation in the first half of November will be welcomed by policymakers, not least because the headline rate fell back into the target range for the first time since August. But with inflation likely to be slow to fall …
19th November 2014
Interest rates in Chile were left unchanged last night at 3.00% and, although policymakers continued to signal the end of the easing cycle, we still think that it has a little further to run. With inflation set to fall back into target and economic growth …
The official data published by the Brazilian authorities give a false impression of the country’s fiscal health. We estimate that various accounting tricks have helped to narrow the reported government budget deficit by between 1.5% and 3.0% of GDP. At …
18th November 2014
Annual GDP growth in Chile dropped to a five-year low in Q3, but on a quarterly basis growth edged up a little. We expect a further, albeit gradual, recovery over the coming quarters. Meanwhile, the current account widened a touch in Q3, but this was …
Interest rates in Peru were left unchanged at 3.50% last night but, with economic growth still weak and inflation likely to fall back into target in the coming months, we are comfortable with our forecast for at least one more 25bp rate cut in the current …
14th November 2014
The growing pile of cash held abroad by US firms, which has now reached more than $2trn, or 12% of GDP, is unlikely to provide much of a boost to the economy, not least because the prospects of that cash being repatriated are fairly low. … A limp …
13th November 2014
A decline in mining output weighed on Mexican industrial production in September, but strong growth in the manufacturing and construction sectors suggests that the rest of industry is in good shape. With the decline in mining output set to ease, we expect …
11th November 2014
The pick-up in Mexican inflation from 4.2% in September to 4.3% in October probably marks the peak for this cycle. We expect it to edge down over the rest of this year and think it could reach the central bank’s 3% target by mid-2015. … Mexico Consumer …
7th November 2014
The larger-than-expected drop in Brazilian inflation last month will come as a welcome relief to policymakers but is unlikely to prevent interest rates from rising further over the coming months. Elsewhere in the region, the sharp jump in inflation in …
Dilma Rousseff’s triumph in last month’s Brazilian presidential election made it a hat-trick of victories for incumbents in Latin America this year. Meanwhile, in Uruguay the Frente Amplio party is on course to retain power later this month. But in this …
5th November 2014
September’s Brazilian industrial production data suggest that the sector remained a drag on the overall economy in the third quarter and, with both domestic and external demand set to remain weak, it is unlikely to take over as a driver of growth in the …
4th November 2014
October’s PMI survey suggests that Brazilian manufacturing will continue to contract in year-on-year terms as we head into 2015. By contrast, the survey offers further evidence that Mexican manufacturing growth will build momentum over the coming months. …
3rd November 2014
Interest rates in Colombia were left unchanged at 4.50% last night and with economic growth slowing and inflation unlikely to pose a problem for policymakers, further interest rate hikes now seem unlikely. In fact, to the extent that rates are changed in …
31st October 2014
The surprise decision by Brazil’s central bank to raise interest rates now, rather than waiting for Dilma Rousseff’s new government to take shape, is an early sign that tackling inflation could be given greater priority in Dilma’s second term. The focus …
30th October 2014
Data for September suggest that conditions in some parts of Chile’s economy – notably manufacturing – improved following a weak performance in August. But the bigger picture is that GDP growth appears to have slowed even further in Q3 as a whole – perhaps …
29th October 2014
After a rollercoaster campaign that at times had promised to deliver a much-needed shift in economic policy, presidential elections in Brazil ultimately delivered more of the same. Dilma Rousseff was returned to office by the slimmest of margins and the …
28th October 2014
Dilma Rousseff's narrow victory in yesterday’s presidential run-off in Brazil has dented hopes that the elections might deliver much-need economic policy reforms. Growth in Ms. Rousseff’s first term in office was already the weakest under any president …
27th October 2014
The slowdown in Latin America over the past year is more likely to be the start of a new phase of weaker growth than a temporary blip. We expect regional GDP growth to remain stuck at 2-3% for the next decade and for interest rates to remain low for a …
24th October 2014
Capital outflows following the Argentine government’s default probably contributed to the slump in economic activity in August, leaving the economy on course to contract by 1-2% this year. Unless the government can solve the economy’s shortage of foreign …
On the face of it, the Venezuelan government’s restructuring of petro-loans from China should boost foreign currency revenues and ease the economy’s severe dollar drought. But in reality, the deal will only offset the impact of recent oil price falls, …
23rd October 2014
The latest polls suggest that this weekend’s run-off in Brazil’s presidential election is still too close to call, which we suspect favours the incumbent, Dilma Rousseff, over the challenger, Aécio Neves. In this Election Watch we outline what a victory …
Following last month’s broad sell-off in “risky” assets, in which financial markets in Latin America were hit across the board, the performance this month has been more mixed. While equities have extended their losses, currencies and bonds have fared …
22nd October 2014
Interest rates in Chile were cut by 25bp to 3.00% last night and, although the accompanying statement suggests that we may be nearing the end of the easing cycle, we expect further cuts over the next couple of quarters. We’re sticking to our forecast for …
17th October 2014
The biggest loser from the drop in oil prices within Latin America will be Venezuela and, although the government may make its debt servicing obligations this month, a default seems more likely than not in the next couple of years if oil prices remain at …
16th October 2014
Activity data for August contain some evidence that conditions in Brazil’s beleaguered economy may have started to improve. But as things stand it seems the best we can hope for is that GDP in the third quarter as a whole was broadly flat in q/q terms. …
Fresh falls in global commodity prices in recent weeks have stoked concerns about how Latin America will fare as the tailwinds from the global commodities boom fade. The short point is that regional growth will be much weaker in the years ahead. But while …
13th October 2014
Interest rates in Peru were left unchanged at 3.50% last night but with economic growth still weak and inflation likely to remain within target over the coming months, we are comfortable with our forecast for at least one more 25bp rate cut in the current …
10th October 2014
Stronger investment spending looks set to underpin faster economic growth in Mexico over the coming years. So in contrast to Brazil where weak investment has caused capacity constraints to build and looks set to leave growth stuck at around 1.5% in …
9th October 2014
The latest rise in Brazilian inflation, which has pushed it further above the upper bound of the central bank’s target range, will give further ammunition to Aécio Neves ahead of his run-off against President Rousseff later this month. It also strengthens …
8th October 2014
The Venezuelan government may have gathered enough foreign currency to meet its debt obligations this month, but with the economy crippled by a shortage of foreign currency and oil prices now falling it is only a matter of time before the public finances …
3rd October 2014
No candidate looks set to secure a majority in the first round of voting in Brazil’s presidential election this Sunday, meaning that the race is all but certain to extend to a second round run-off between the two leading candidates on 26 th October. The …
2nd October 2014
The resignation of the Governor of the Argentine central bank (BCRA) opens the door for even more unorthodox economic policy. With no end in sight to the government’s debt dispute, and policymaking heading in the wrong direction, the economy looks set to …
The September manufacturing PMI for Brazil gives little hope that the economy snapped out of recession in the third quarter. Meanwhile, in Mexico, PMI surveys both at home and in the US continue to suggest that the manufacturing sector is on course for a …
1st October 2014
Markets in Latin America have been hit particularly hard in the latest EM sell-off. A combination of factors has been responsible, including falling commodity prices and a renewed focus on the likely effects of policy tightening by the Fed. But in the …
30th September 2014
Interest rates in Colombia were left unchanged at 4.50% on Friday and we do not expect rates to rise in the near term. There may be one more 25bp increase to 4.75% next year if domestic demand remains strong and inflation rises. But the bigger picture is …
29th September 2014
The past month has seen renewed concerns about the growth outlook for much of Latin America. GDP in the region grew by just 1.1% y/y in Q2 and the available data so far point to a similar pace of expansion in Q3. In response, the authorities in several …
26th September 2014
Some commentators have argued that the deterioration in Brazil’s public finances in recent years has raised the risk of a fiscal crisis during the next presidential term, which runs from 2015 to 2019. We’re not so sure. The fiscal position has certainly …
The Argentine economy was extremely weak in the second quarter and, with the government since defaulting on its debt, it seems that the situation will only get worse in the second half of this year. As such, GDP may contract by as much as 2% this year, …
25th September 2014
The latest opinion polls suggest that Brazil’s presidential election is going to go down to the wire, with support for President Rousseff stabilising in recent weeks. From the perspective of the markets, we fear that investors are overplaying the …
24th September 2014
Colombia’s economy has been a rare bright spot in Latin America so far this year but, while we don’t expect growth to collapse, we do expect it to slow over 2015-16. This in turn is likely to mean that interest rates do not rise as far as most currently …
23rd September 2014
Today’s weaker-than-expected Colombian GDP data, which showed that the economy grew by 4.3% y/y in Q2 (from 6.4% y/y in Q1), are likely to tip the balance in favour of interest rates being left on hold at 4.5% at next Friday’s meeting. And with growth …
16th September 2014
The Argentine government has introduced various measures in recent weeks to increase the availability of foreign currency in a bid to stem the depreciation of the peso in both official and unofficial markets. While the measures may give some short term …
15th September 2014
Interest rates were cut by 25bp in both Chile and Peru last night and policymakers have room to reduce rates further if growth continues to slow. With little chance of a significant rebound in growth over the coming years, we expect rates in both …
12th September 2014
