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Stronger inflation & hawkish Fed mean another 75bp hike next week The stronger-than-expected Mexican inflation figure of 8.8% y/y in the first two weeks of September, coming alongside the hawkish Fed decision yesterday, means that we now think Banxico …
22nd September 2022
Inflation falls further, just one more hike likely Brazil’s headline inflation rate fell to a 14-month low of 8.7% y/y in August, but hawkish comments from the central bank this week support our view that there will be one final 25bp interest rate hike …
9th September 2022
Industry supported by easing supply constraints Mexico’s industrial sector posted disappointing growth of 0.4% m/m in July as stronger automobile output was partially offset by weakness elsewhere. More timely indicators suggest that, the auto sector …
Inflation rise shortens odds of 75bp hike, but we expect Banxico to opt for 50bp The further rise in Mexico’s headline inflation rate to 8.7% y/y in August will strengthen the case for Banxico to deliver a third consecutive 75bp increase to interest rates …
8th September 2022
Industry starting Q3 on a better footing The 0.6% m/m rise in Brazilian industrial production in July suggests that, while headwinds facing the economy are growing, it started the third quarter in decent shape. Taken together with the robust Q2 GDP …
2nd September 2022
Strong H1 to be followed by weakness in H2 The stronger-than-expected 1.2% q/q rise in Brazilian GDP in Q2 has prompted us to revise up our 2022 GDP growth forecast to an above-consensus 2.5% (previously 2.0%). And the likelihood of a final 25bp rate …
1st September 2022
Inflation falling, but interest rates to remain high The further fall in Brazil’s headline inflation rate to 9.6% y/y in the first two weeks of August was mainly due to tax cuts on energy and masks the fact that underlying price pressures remain strong. …
24th August 2022
Upward inflation surprise raises threat of another 75bp hike The stronger-than-expected rise in Mexico’s headline inflation rate to 8.6% y/y in the first two weeks of August raises the risk that Banxico pushes through another 75bp interest rate hike at …
Disappointing Q2 likely followed by recession Chile’s economy merely stagnated in Q2 and the chances are high that it will fall into recession over the second half of the year. Meanwhile, current account risks are continuing to build – with the deficit …
18th August 2022
Industry remains soft Mexico’s industrial sector posted sluggish growth of just 0.1% m/m in June and the data suggest that the first estimate of Q2 GDP growth may be revised down. The backdrop of weakness in the US means that we expect Mexican industrial …
11th August 2022
Inflation fall eases pressure on Copom The sharp fall in Brazilian inflation to 10.1% y/y in July from 11.9% y/y in June was mainly a result of tax cuts on energy; inflation in most other price categories remains extremely strong. Even so, at the margin, …
9th August 2022
Further rise in inflation to prompt another 75bp on Thursday The rise in Mexico’s headline inflation rate to 8.2% y/y in July, coming alongside the stronger-than-expected Q2 GDP figures released in late-July, mean that Banxico is almost certain to hike …
Broad based weakness in industry The 0.4% m/m fall in Brazilian industrial production in June, taken together with softer surveys last month, provides further evidence that the economy is losing momentum. GDP growth in the second half of the year is set …
2nd August 2022
Another solid quarter, but recovery to struggle from here Provisional GDP figures show that Mexico’s economy grew by a stronger-than-expected 1.0% q/q in Q2 and we have nudged up our forecast for GDP growth this year to 2.3% (from 1.8% previously). Even …
29th July 2022
Inflation has peaked, but will remain high The drop in inflation in Brazil to 11.4% y/y in the first half of July provides the first clear sign that inflation has passed its peak and is now on a downwards path. But even so, with the headline rate far …
26th July 2022
Further rise in inflation to prompt another 75bp hike The further rise in Mexico’s headline inflation rate to 8.2% y/y in the first two weeks of July means that Banxico is all but certain to deliver another 75bp hike in interest rates, to 8.50%, at its …
22nd July 2022
Industry likely to remain weak Industrial production in Mexico rose by a disappointing 0.1% m/m and timely indicators suggest that the sector was even weaker still in June. With growth in the US weakening, we expect industrial activity to remain soft over …
12th July 2022
50bp hikes on the cards The increases in inflation in Brazil (to 11.9% y/y) and Chile (to 12.5% y/y) last month set the ground for 50bp hikes in policy rates at their respective central banks’ next meetings (in Chile’s case, next Wednesday). In both …
8th July 2022
Multi-decade high inflation to keep Banxico hiking in 75bp steps The rise in Mexican inflation to 8.0% y/y, its highest rate since 2001, will sustain the hawkish shift seen on the Banxico Board at its latest meeting in June. A 75bp hike in the policy rate …
7th July 2022
Inflation surprise seals the deal on a 75bp hike The stronger-than-expected rise in inflation to 7.9% in the first two weeks of June adds to the pressure on Banxico to fight stubbornly strong price pressures. We think Banxico will step up the pace of …
23rd June 2022
Inflation falling but Copom’s tightening cycle has further to run The fall in Brazilian inflation to 11.7% y/y in May suggests that Copom will continue to slow the pace of tightening with a 50bp Selic rate hike, to 13.25%, next week. But with inflation …
9th June 2022
Inflation stabilising points to another 50bp hike Mexico’s inflation rate stabilised at 7.7% y/y in May and we expect that it will trend lower in the coming months. This may temper some of the hawkish sentiment at Banxico. We think that it will stick to …
Copom’s tightening cycle has a little further to run The further rise in Brazilian inflation, to 12.2% y/y in the middle of May, supports our view that there will be another 75pb of hikes in the current tightening cycle (to 13.50%). Investors seem to have …
24th May 2022
Inflation stabilising While Mexico’s headline inflation edged down to 7.6% y/y in the first two weeks of May, this will provide little comfort to the central bank as price pressures remain stubbornly strong. The risks are still skewed towards Banxico …
Q1 contraction and headwinds building The 0.8% q/q contraction in Chile’s GDP in Q1 suggests the economy is coming back down to earth after a stellar 2021, and there is a growing chance of a recession this year. Meanwhile, the current account deficit …
18th May 2022
Inflation hits highest rate since 2003 The jump in Brazilian inflation to 12.1% y/y in April was driven by a broad based increase in price pressures and supports our view that the central bank’s tightening cycle has further to run. We still expect an …
11th May 2022
Broad-based inflationary pressures The rise in Mexico’s headline and core inflation in April, to 7.7% y/y and 7.2% y/y respectively, has a bit further to run in the near term. This will prompt Banxico to deliver another 50bp rate hike this week, to 7.00%, …
9th May 2022
Signs of life in Brazilian industry The 0.3% m/m increase in Brazilian industrial production in March suggests that the sector made a stronger contribution to GDP growth in Q1 than in Q4, and there are signs of further improvement in April. This supports …
3rd May 2022
Solid Q1 but growth to slow sharply in Q2 The pick-up in Mexico’s GDP growth to 0.9% q/q last quarter was largely a result of a strong carryover from late 2021, and the economy was weakening sharply heading into Q2. As the headwinds from high inflation …
29th April 2022
Inflation jump to keep Copom tightening The jump in Brazilian inflation to 12.0% y/y in the middle of April, coming alongside the recent fall in the real, means Copom will almost certainly raise the Selic rate by another 100bp (to 12.75%) when it meets …
27th April 2022
Price pressures intensifying The rise in Mexico’s inflation to 7.7% y/y in the first two weeks of April was driven by a broad based strengthening of price pressures, which will be a concern for the central bank. This, alongside the increasingly hawkish US …
22nd April 2022
Industrial recovery stalling The disappointing 1.0% m/m fall in Mexico’s industrial production in February was partly because a temporary boost to mining output at the start of the year reversed course. But there were broader signs of weakness in industry …
11th April 2022
Inflation spikes to keep central banks in tightening mode The larger-than-expected rises in inflation in both Chile and Brazil last month (to 9.4% and 11.3%, respectively) support our view that their central banks will raise interest rates by more than …
8th April 2022
Inflation has not yet peaked The rise in Mexico’s headline and core inflation in March, to 7.45% y/y and 6.8% y/y respectively, has further to run in the near term as food and energy inflation edges higher. Broader price pressures will also remain strong, …
7th April 2022
Industry still a weak point in the recovery The better-than-expected 0.7% m/m rise in Brazilian industrial production in February was supported by a rebound in mining, which is likely to prove temporary. And surveys point to renewed weakness last month. …
1st April 2022
Inflation set to jump, Copom to continue hiking The stronger-than-expected Brazilian inflation reading for the first half of March, of 10.8% y/y, will be followed by a jump to 11.5-12.0% in the near term as recent fuel price hikes filter through. While …
25th March 2022
Core inflation continues to march higher While Mexico’s headline inflation stabilised at 7.3% y/y in the first half of March, the further rise in the core rate to 6.6% y/y suggests that the central bank is still struggling to keep a lid on price …
24th March 2022
Economy slowing but external vulnerabilities growing The 1.8% q/q rise in Chile’s GDP in Q4 kept output well above its pre-pandemic trend but, with the economy now coming back down to earth, there is a growing chance of a recession this year. Meanwhile, …
18th March 2022
Solid start to 2022, but challenges ahead The unexpectedly-strong 1.0% m/m rise in Mexico’s industrial production in January suggests the economy came through the Omicron wave in decent shape. That said, the fallout from the war in Ukraine war may hold …
11th March 2022
Rising inflation to keep Copom’s tightening cycle going The rise in Brazilian inflation to 10.5% y/y in February will be followed by further increases to more than 11% in the coming months on the back of higher fuel prices. While Copom hinted at its last …
Rising price pressures may prompt more aggressive tightening The rise in Mexico’s headline inflation to 7.3% y/y in February was mainly driven by a jump in the core rate to 6.6% y/y and the fallout from the war in Ukraine will push inflation up further in …
9th March 2022
Economy off to a poor start to the year The larger-than-expected 2.4% m/m fall in Brazilian industrial production in January almost fully reversed the gains made towards the end of last year. And taken together with weak surveys for February and possible …
Q4 strength unlikely to last The stronger-than-expected 0.5% q/q rise in Brazilian GDP in Q4 was mainly a result of turnaround in the agricultural sector, which is unlikely to be sustained. And in the meantime, high-frequency indicators for the services …
4th March 2022
Rising inflation means Banxico has more work to do The small rise in Mexico’s headline inflation rate to 7.2% y/y over the first half of February was driven by a jump in core inflation to 6.5% y/y, suggesting the central bank is struggling in its battle …
24th February 2022
Rising inflation suggests more rate hikes to come The stronger-than-expected rise in Brazil’s inflation to 10.8% y/y over the first half of February is likely to mean that the central bank’s tightening cycle has much further to run. We expect a cumulative …
23rd February 2022
Strong end to 2021 but headwinds building The stronger-than-expected 4.3% q/q surge in Colombia’s GDP in Q4 took output back to its pre-pandemic trend, confirming the recovery has been one of the quickest in the region. Although we still think growth will …
15th February 2022
Solid end to 2021 but bumpy road ahead The solid 1.2% m/m rise in Mexico’s industrial production in December was partly driven by a strong rise in auto production as global supply shortages eased. However, Omicron-related disruption will probably cause …
11th February 2022
Rising core inflation to prompt another 50bp hike from Banxico The fall in Mexican inflation to 7.1% y/y suggests that the headline rate has peaked, but the central bank will remain concerned about rising core inflation. As such, we expect another 50bp …
9th February 2022
Auto recovery supports rebound in industry A chunky rise in Brazil’s motor vehicle production supported a much stronger-than-expected 2.9% m/m increase in industrial production in December and means that the economy may have just exited from its technical …
2nd February 2022
Falling into recession The 0.1% q/q fall in Mexico’s GDP in Q4 confirmed that the economy slipped into a recession over the second half of 2021, and we think growth this year will be weaker than most expect. Despite the softness of the economy, we expect …
31st January 2022