Filtered by Subscriptions: Latin America Economics Use setting Latin America Economics
A victory for either Oscar Zuluaga or Juan Manuel Santos in the second round of Colombia’s presidential election next month is unlikely to cause a stir in the markets. But with neither candidate likely to take steps to wean the economy off its reliance on …
27th May 2014
Mexican GDP growth fell short of expectations in the first quarter, but the economy looks set to fare much better over the coming years as the government presses ahead with major investments and the neighbouring US economy strengthens. So while we are …
23rd May 2014
Currencies, equities and bonds have all fared well so far this month after a turbulent past year. While we expect bouts of financial market volatility as US monetary policy becomes less accommodative, particularly in the FX market, we suspect that most of …
22nd May 2014
The recent depreciation of the Argentine peso may be small, but it could be significant in marking thestart of another prolonged decline. With rampant inflation eroding the economy’s externalcompetitiveness, and fluctuations in risk appetite likely to …
21st May 2014
Chile’s economy performed better than expected in the first quarter of this year, but the bigger picture is that growth has slowed markedly from the 5.5-6.0% rates of recent years. As the commodities boom comes to an end, we expect GDP growth of just 2.8% …
19th May 2014
Tempting though it is to blame the recent weakness of Mexico’s economy on problems north of the border, the truth is that many of the factors that have weighed on growth over the past six months or so have been home-grown. However, there are signs that …
16th May 2014
The Chilean central bank (BCC) left interest rates unchanged last night and, despite weak economic growth, our long-held view that rates will end the year at 4% looks increasingly likely. Elevated inflation and a large current account deficit will limit …
The expected re-election of Juan Manuel Santos as Colombia’s president is good news for peace talks with the FARC, but will probably mean that major economic reforms to boost the competitiveness of industry remain on the back-burner. With the commodities …
14th May 2014
After contracting in the fourth quarter of last year, a poor start to this year means that the Argentine economy is probably already in a technical recession. Revisions to the government’s methodology mean that reported economic growth will probably be …
12th May 2014
Rising inflation looks set to force policymakers in most parts of Latin America to keep monetary policy relatively tight despite evidence that the region is entering a new phase of weaker economic growth. The key exception is Mexico where an increasingly …
9th May 2014
Interest rates in Peru were left unchanged at 4% last night and we do not foresee aggressive monetary easing in the next 18 months. While economic growth looks set to slow, we think that a large current account deficit and above-target inflation limit the …
The latest opinion polls suggest that President Rousseff remains the clear favourite to win a second term in office in October’s elections. But there is evidence that rising inflation is eating into her support – and our inflation forecast suggests that …
8th May 2014
The El Niño weather event that is expected later this year may cause some localised disruptions, but it is unlikely to have a marked impact on overall economic activity in the region. … El Niño to have limited impact on real …
7th May 2014
The 2014 Football World Cup, which gets underway next month in Brazil, is unlikely to provide much of a boost to the country’s flagging economy in the short term – and it certainly won’t do anything to address the structural problems that are weighing on …
6th May 2014
April’s manufacturing PMI suggests that Brazilian manufacturers made a disappointing start to the second quarter. By contrast, the outlook for Mexican manufacturers continues to improve as the US recovery strengthens. … Slow start to Q2 for Brazilian …
2nd May 2014
The Mexican government’s plan to oversee investment projects worth a cumulative 46% of GDP, including an overhaul of the energy industry, should go a long way to ensuring that the economy is Latin America’s relative outperformer over the coming years. As …
1st May 2014
Chile’s activity data for March point to GDP growth of just 2.7% y/y in the first quarter, suggesting that the recent slowdown in the economy is here to stay. As such, we are increasingly comfortable with our below-consensus forecast for GDP to expand by …
30th April 2014
Having been one of worst performing EM currencies in 2013, the Brazilian real has been one of the best performers so far in 2014, prompting speculation that it will strengthen further from here. We’re sceptical. While much of the necessary adjustment in …
29th April 2014
We do not think that the Colombian central bank’s (BANREP) surprise decision to increase interest rates by 25bp to 3.5% on Friday marks the beginning of an aggressive tightening cycle. With economic growth likely to be slower than policymakers anticipate …
28th April 2014
Inflation has started to accelerate once again in Brazil, casting doubt over signals from the central bank that the hike in interest rates earlier this month could be the last in the current tightening cycle. Inflation rose to 6.2% y/y in March – taking …
25th April 2014
The past month has seen Latin American financial markets perform fairly well, building on the momentum of March’s rebound. But despite the recent gains, we expect some renewed downside this year amid slowing economic growth and lower commodity prices. … …
23rd April 2014
The financial media and markets alike have hailed the apparent shift towards pragmatism in both Argentina and Venezuela as a new dawn. But while recent developments are promising – particularly in Argentina – much more still needs to be done to put the …
Mexican investment has been weak for the past two years, but we do not think that the economy is heading for a Brazilian-style capacity crunch. Business investment has been relatively buoyant, and with FDI set to flood into the energy sector, we expect …
22nd April 2014
A victory for Juan Manuel Santos in next month’s Colombian presidential election may be welcomed bythe markets, but it is unlikely to herald the beginning of structural reforms. As such, with thecommodities boom coming to an end, Colombia faces a …
15th April 2014
We have been warning for a very long time that the recent period of strong growth in Latin America has been built on shaky foundations. With external vulnerabilities mounting, several countries in the region are now exposed to tighter global monetary …
14th April 2014
Peruvian interest rates were left unchanged at 4% last night and we think that high inflation and a large current account deficit mean that there is little room for aggressive easing this year as growth disappoints. As such, we are sticking to our …
11th April 2014
The latest jump in inflation in Brazil will put pressure on policymakers to raise interest rates further, despite having signalled an end to monetary tightening at last month’s COPOM meeting. In contrast, inflation in Mexico fell last month and is now …
9th April 2014
The Pacific Alliance pact has raised hopes of a boom in intra-regional trade, but the high degree of overlap between the export baskets of the member nations makes that unlikely. Nonetheless, the pursuit of market-friendly reforms by the Pacific Alliance …
Brazil’s central bank raised interest rates last night, but changes to the accompanying statement suggest this could be the final increase in this tightening cycle. Nonetheless, with inflation once again heading in the wrong direction, we think it would …
3rd April 2014
Brazil’s manufacturing PMI picked up a little in March, while Mexico’s manufacturing PMI edged down. But the bigger picture is that Brazil’s manufacturing sector is still barely growing. By contrast, while the PMI survey suggests that conditions facing …
1st April 2014
Inflation in Brazil appears to be accelerating once again, and may have been as high as 6% y/y last month. A combination of droughts and a weaker exchange rate are contributing to the problem. But the underlying issue remains that constraints on the …
It seems unlikely that the next Colombian president will be able to rely on a booming natural resources sector to support economic growth. As such, if Juan Manuel Santos is successful in seeking re-election next year, he must kick-start the reform process …
31st March 2014
Argentina’s new national accounts data add to the impression that the government is cleaning up its act and moving towards more orthodox policymaking. But with the economy in the midst of a slow-burning balance of payments crisis, it will still be a rocky …
28th March 2014
Latin America’s financial markets stabilised in March after a woeful start to the year. In most countries, currencies and equity markets made modest gains. Colombia’s financial markets performed particularly well, with the peso gaining the most of all …
27th March 2014
There have been further signs during the past month that Latin America has entered a new era of sluggish economic growth. With most of the official data for the fourth quarter now released, our calculations show that regional GDP growth slowed to 2.6% y/y …
26th March 2014
The Venezuelan government’s introduction of a new foreign exchange mechanism has been well received by the markets, but with no real efforts to significantly increase the supply of foreign currency we suspect that it is another false dawn in Venezuela’s …
25th March 2014
A depreciation of the Argentine peso has caused Colombia to overtake Argentina as the region’s third largest economy. Meanwhile, with a shortage of hard currency biting and the bolivar weakening, Venezuela has been the key casualty in the recent …
24th March 2014
The world economy is recovering, but we expect growth in Latin America to continue to trudge along at a rate of 2.5-3.0% over the coming years. Sluggish growth will be due in part to less supportive external conditions as Chinese demand for commodities …
21st March 2014
Colombian GDP growth beat expectations in the fourth quarter, but we doubt that the impressiveperformance can be sustained. Lower commodity prices, tighter global monetary conditions and weakercredit growth suggest that GDP growth will slow. We have …
20th March 2014
Chile’s economy slowed dramatically in the fourth quarter of last year and growth looks set to remain weak throughout 2014-15 as the copper boom comes to an end. We are forecasting GDP growth of just 2.8% for this year. But rising inflation, a weakening …
18th March 2014
The central bank of Chile (BCC) last night cut interest rates in response to a pronounced slowdown in economic growth, while Peruvian interest rates were left on hold after a pick-up in activity at the end of last year. Both economies are set for a period …
14th March 2014
The sharp rise in regional inflation over the past year is starting to cause concern in some quarters. But a closer look reveals that the increase has been due to a jump in inflation in just two countries – Argentina and Venezuela. Elsewhere, weakening …
13th March 2014
The past week has seen renewed concern that a slowdown in China will drag on growth in the rest of the emerging world, including Latin America. We think some of these concerns are justified. But while Latin America as a whole is vulnerable to shifts in …
Brazil’s president, Dilma Rousseff, looks set to triumph at elections later this year, despite the fact that economic growth during her time in office has been weaker than under any president since the early 1990s. If Ms. Rousseff is to oversee a pick-up …
11th March 2014
One year after the death of Hugo Chavez, the former Venezuelan President’s legacy of fiscal largesse and rampant inflation has left the economy on the brink of a balance of payments crisis. With social unrest growing, there is an increasing threat that …
6th March 2014
In contrast to several other emerging markets (EMs), Colombian policymakers have continued to refrain from taking steps to prevent the peso from weakening. As such, unless the currency begins to depreciate rapidly, we doubt that the central bank (BANREP) …
4th March 2014
Manufacturing PMIs fell in both Brazil and Mexico last month. But while we expect growth in Brazilian manufacturing to remain sluggish for the foreseeable future, we continue to expect Mexican manufacturers to fare much better over the course of this …
3rd March 2014
Venezuela’s government has responded to the eruption of violent protests in the country over the past month with yet another overhaul of its exchange rate system – the aim being to provide more foreign currency to the economy and thus ease the shortages …
28th February 2014
Fourth quarter growth in Brazil was stronger than even we had expected, but was driven by a rebound in exports that will be difficult to sustain over the coming quarters. We continue to expect the economy to grow by just 2% this year. … Brazil: stronger …
27th February 2014
Following the turmoil experienced during the first few weeks of this year, financial markets across much of Latin America have stabilised over the past month. In most countries, bond yields have fallen and currencies have strengthened. And while the …
25th February 2014
