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Another 150bp rate hike almost certain next week The stronger-than-expected Brazilian mid-month inflation reading for January, of 10.2% y/y, means that the central bank is on course to hike the Selic rate by another 150bp (to 10.75%) next Wednesday. That …
26th January 2022
Inflation peaked but will remain stubbornly high The fall in Mexico’s inflation to 7.1% y/y in the first two weeks of the year gave the first sign that inflation has peaked and we think that it will continue to trend lower over the coming months. That …
24th January 2022
Industrial woes continue The disappointing 0.1% m/m fall in Mexican industrial production in November raises the chances that the economy slipped into a recession last quarter. And while auto production looks to have rebounded strongly in December, the …
11th January 2022
Inflation fall won’t stop Copom from hiking further The fall in Brazilian inflation to a four-month low of 10.1% y/y in December confirmed that the recent food and energy inflation spikes are starting to unwind. But with the headline rate still far above …
Strong inflation to prompt rate hikes in Mexico and Chile Inflation in Mexico stabilised at 7.4% y/y in December and, with price pressures likely to remain strong, we expect Banxico to deliver another 50bp rate hike, to 6.00%, at its meeting in February. …
7th January 2022
Industrial recession continued in Q4 The 0.2% m/m fall in Brazilian industrial production in November, taken together with the weak surveys for December, suggests that the sector probably knocked 0.1-0.2%-pts off q/q GDP growth in Q4. There’s a very real …
6th January 2022
High inflation will keep central banks in tightening mode The fall in Brazilian inflation, to 10.4% y/y, in mid-December is likely to be followed by further declines in the coming months. Inflation in Mexico edged up in the same period, to 7.45% y/y, but …
23rd December 2021
Auto sector leads a small rebound The small 0.6% m/m rise in Mexican industrial production in October was helped by a rebound in auto production, suggesting the sector may be starting to turn a corner. However, the risk of further global supply …
10th December 2021
Early signs of stabilisation The slightly softer-than-expected Brazilian inflation figure, of 10.7% y/y, isn’t going to stop Copom from hiking the Selic rate by another 150bp (to 10.75%) when it meets in early February. But it does provide a sign that …
Inflation hits 20-year high but another 25bp hike still likely The rise in Mexico’s headline inflation to a 20-year high of 7.4% y/y in November will be a concern for Banxico. But it was partly driven by unfavourable base effects which will soon unwind. …
9th December 2021
Multi-year high inflation will prompt further aggressive hikes The further rise in Chile’s inflation to 6.7% y/y – the highest rate since late 2008 – will keep pressure on the central bank to deliver further aggressive monetary tightening. We expect …
7th December 2021
Early signs of another contraction in Q4 The surprise 0.6% m/m fall in Brazilian industrial production in October and weakness in the surveys for last month provide early evidence that the contraction in the economy last quarter may be followed by another …
3rd December 2021
In recession despite re-opening The 0.1% q/q fall in Brazilian GDP in Q3 confirmed that problems in the agricultural and industrial sectors tipped the economy into a technical recession. And with financial conditions tightening, the terms of trade …
2nd December 2021
175bp rate hike on the cards The Brazilian inflation reading of 10.7% y/y in mid-November (the same as the October full month figure) provides the first sign that inflation is now stabilising. But with the headline rate still far above target and fiscal …
25th November 2021
Banxico tightening likely to remain gradual despite inflation surge The surge in Mexico’s inflation to 7.05% y/y in the first two weeks of November – the highest since 2001 – was partly a result of unfavourable base effects, but underlying price pressures …
24th November 2021
Turbocharged recovery to prompt more aggressive hikes The 4.9% q/q surge in Chile’s GDP in Q3 took output not only above its pre-pandemic level but also its pre-crisis trend . The strength of the figures means that we now expect above-consensus growth of …
18th November 2021
Economy roaring back to life The stronger-than-expected 5.7% q/q jump in Colombia’s GDP in Q3 more than offset the setback in Q2, and took output 2.6% above its pre-pandemic level. While the recovery will slow from here, we now expect above-consensus GDP …
16th November 2021
Auto slump drags down industry The surprise 1.4% m/m drop in Mexican industrial production in September in large part reflects auto sector woes and suggests that the flash Q3 GDP estimate of -0.2% q/q may be revised down. This release adds to our view …
11th November 2021
Risk of an even larger rate hike growing The larger-than-expected jump in Brazilian inflation, to 10.7% y/y, last month, coming alongside a rise in inflation expectations and continued fiscal risks, increases the likelihood that Copom ups the pace of …
10th November 2021
Another 25bp rate hike on the cards The rise in inflation in Mexico to 6.2% y/y in October paves the way for another rate hike at the central bank’s meeting on Thursday. However, the surprise fall in GDP in Q3 will probably keep the pace of tightening …
9th November 2021
Industry pulled down GDP growth in Q3, likely to continue in Q4 The 0.4% m/m fall in Brazilian industrial production in September suggests that the sector knocked 0.1-0.2%-pts off q/q GDP growth over Q3 as a whole. The latest surveys suggest that …
4th November 2021
Poor Q3 and recovery to struggle from here The surprise 0.2% q/q contraction in Mexico’s economy in Q3 was largely driven by lockdown-related disruption to the services sector, which should unwind in Q4 as restrictions have been eased. Even so, we think …
29th October 2021
Copom now likely to hike by 150bp The larger-than-expected increase in Brazilian inflation in the middle of October, to 10.3% y/y, alongside the latest rise in inflation expectations mean that Copom is likely to step up the pace of tightening at its …
26th October 2021
Inflation to remain stubbornly high in the coming months The further rise in Mexico’s core inflation rate to a 12-year high of 5.1% y/y in the first two weeks of October, which contributed to the rise in the headline rate to 6.1% y/y, will add to the …
22nd October 2021
Industrial output grinds higher despite auto weakness The stronger-than-expected 0.4% m/m rise in Mexico’s industrial production in August suggests that the economy may have held up better than we had previously anticipated in Q3. But, under the surface, …
12th October 2021
Inflation jumps but nearing a peak The jump in Brazilian inflation to 10.2% y/y in September was largely a result of the hike in household electricity tariffs last month and, while the headline rate is at – or very close to – a peak, it will remain at …
8th October 2021
High inflation to prompt more aggressive hikes The jump in Chile’s inflation to 5.3% y/y in September suggests that the central bank may once again ramp up the pace of its tightening cycle. We now think it is more likely than not that it will deliver a …
Rising inflation to prompt more rate hikes The rise in Mexico’s headline and core inflation to 6.0% y/y and 4.9% y/y in September adds to our view that the central bank’s tightening cycle has much further to run. We expect a further 125bp of rate hikes, …
7th October 2021
Industry dragged on growth in Q3, weakness to persist in Q4 The larger than expected 0.7% m/m fall in Brazilian industrial production in August suggests that the sector probably knocked 0.1-0.2%-pts off q/q GDP growth in Q3. Persistent shortages of …
5th October 2021
Inflation spike to prompt another large hike in October The increase in Brazilian inflation to 10.1% y/y in the middle of September means that another large hike in the Selic rate at the Copom meeting next month is nailed on (we expect a 100bp hike to …
24th September 2021
High inflation to keep Banxico in tightening mode The renewed rise in Mexican headline and core inflation in the first two weeks of September, to 5.9% y/y and 4.9% y/y respectively, ensures that Banxico will continue its tightening cycle at its meeting …
23rd September 2021
Gloomy prospects for Mexican industry despite July uptick The stronger-than-expected 1.1% m/m rise in Mexico’s industrial production in July provides some encouragement that the economy fared well despite the onset of a third virus wave earlier this …
10th September 2021
Strong price pressures across the board The rise in Brazil’s headline inflation rate to 9.7% y/y last month was driven by a broad-based strengthening of price pressures. With the economy re-opening and electricity tariffs hiked this month, the headline …
9th September 2021
Falling inflation unlikely to prevent further rate hikes The drop in Mexico’s headline inflation rate to 5.6% y/y in August masks a further rise in core inflation, to 4.8% y/y, which will be a concern for the central bank. This suggests that its gradual …
Above-target inflation to keep the central bank in a hawkish mood The further rise in Chile’s inflation to 4.8% y/y in August suggests that the central bank’s tightening cycle has a lot further to run. We expect a further 100bp of rate hikes, to 2.50%, by …
8th September 2021
Industry likely to be the weak spot in Q3 The 1.3% m/m fall in Brazilian industrial production in July confirms that the sector continued its weak performance into the start of Q3, and surveys suggest that August will be weak too. That said, with the …
2nd September 2021
Economy picking up after a soft Q3 Brazil’s GDP contracted by 0.1% q/q in Q2 but, with virus cases falling sharply, it looks like Q3 will be a lot stronger. We doubt that the fall in output last quarter will have much bearing on the central bank, which is …
1st September 2021
Another 100bp hike on the cards The rise in Brazilian inflation to 9.3% y/y in the middle of August provides Copom with plenty to worry about and will keep it on course to hike the Selic rate by another 100bp (to 6.25%) next month. The outturn was a touch …
25th August 2021
Rising core inflation to keep Banxico hiking Mexico’s headline inflation rate dropped to a weaker-than-expected 5.6% y/y in the first half of August, but the further rise in core inflation will continue to concern the central bank. We expect another 25bp …
24th August 2021
Recovery picking up pace after Q2 slowdown The stronger-than-expected 1.0% q/q rise in Chile’s GDP, alongside the brightening economic outlook, means we are raising our above-consensus 2021 growth forecast to 10% (from 9%). We also expect that the central …
18th August 2021
Clouds gathering over Mexican industry The surprise 0.5% m/m fall in Mexico’s industrial production in June was driven by broad-based declines across sectors, including further disruption to auto production. Industry probably continued to struggle in July …
11th August 2021
Rising inflation will add to Copom’s hawkishness The further rise in Brazil’s headline inflation to 9.0% y/y in July will add to the central bank’s concerns over the inflation outlook. We think that its aggressive tightening cycle has much further to run, …
10th August 2021
Above-target inflation to keep Banxico in tightening mode Despite the small fall in Mexico’s headline inflation rate to 5.8% y/y in July, core inflation rose further to 4.7% y/y on the back of higher services inflation. This strong inflation reading will …
9th August 2021
A weak end to Q2, but Q3 looking better The stagnation in Brazilian industrial production in June suggests that industry made a negative contribution to q/q GDP growth over Q2 as a whole. But with virus cases having fallen sharply, it looks like the …
3rd August 2021
Robust Q2 but recovery to slow from here The re-opening of Mexico’s economy caused GDP growth to accelerate to 1.5% q/q in Q2, and we suspect that this preliminary figure will be revised up. But with new virus cases rising sharply, the economy is likely …
30th July 2021
Inflation jump likely to prompt a 100bp hike The rise in Brazilian inflation to 8.6% y/y in the middle of July means that the headline rate is overshooting the central bank’s latest projections. That’s likely to tip the balance on Copom towards a larger …
23rd July 2021
Above-target inflation to keep Banxico in tightening mode The small fall in Mexico’s headline inflation to 5.8% y/y in the first half of July was mainly due to fuel inflation dropping back, while the core rate remained stubbornly high at 4.6% y/y. The …
22nd July 2021
Industry holding up while auto shortages bite The small 0.1% m/m gain in Mexico’s industrial production in May came despite a concerning 0.7% m/m drop in manufacturing production as shortages continued to hamper the auto sector. While there are signs that …
12th July 2021
Rising inflation to prompt rate hikes in Brazil and Chile The further rise in Brazilian inflation, to 8.3% y/y, means Copom will continue to hike when it meets next month. But the data are not quite enough to prompt a shift from 75bp hikes to a larger …
8th July 2021
Strong inflation will keep Banxico in tightening mode The rise in Mexico’s core inflation to 4.6% y/y in June was largely driven by temporary factors which will gradually unwind. Nonetheless, given Banxico’s recent hawkish shift, and with headline and …