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Small Q2 recovery but outlook remains bright The 5.2% q/q rise in Chile’s GDP in Q3 may seem small relative to the 13.5% q/q drop in Q2. But the recovery was accelerating through the quarter, and we think that output will return to its pre-crisis level …
18th November 2020
Recovery faces large hurdles despite vaccine hopes The 8.7% q/q rebound in Colombia’s GDP in Q3 meant output was still 9% below its pre-virus level by the end of the quarter. Although hopes for a vaccine have brightened the outlook, weak fiscal support …
17th November 2020
Recovery lost momentum, rate cut likely The Mexican headline industrial production figure for September, which showed that output was flat from August, masks a welcome pick-up in growth in the key manufacturing sector. Even so, it’s clear that the …
11th November 2020
Core inflation stabilising, Banxico still likely to cut Mexican headline inflation inched up further, to 4.1% y/y last month, but that mainly reflects a rise in food inflation and underlying price pressures are stabilising. Taking that together with the …
9th November 2020
Surging food inflation unlikely to concern Copom The further rise in Brazilian inflation to 3.9% y/y in October, from 3.1% y/y in September, was (again) mostly driven by higher food inflation. We don’t think that the central bank will be too concerned …
6th November 2020
Solid end to Q3 September’s solid 2.6% m/m rise in Brazilian industrial production took output above its pre-crisis level, and suggests the economy continued to fare well at the end of Q3. The latest surveys point to further strong gains in October, …
4th November 2020
Double-digit recovery masks underlying weakness The 12% q/q rebound in Mexico’s GDP in Q3 still left output some 8% below its Q4 2019 level. And the recovery lost significant momentum throughout the quarter – a trend which we expect to continue. The …
30th October 2020
Food inflation continues to surge The jump in Brazilian inflation, to a seven-month high of 3.5% y/y in the middle of October, was driven almost entirely by the ongoing spike in food inflation. This is likely to keep inflation high in the next few months. …
23rd October 2020
Above-target inflation unlikely to stop Banxico’s easing cycle Although Mexico’s headline inflation was above the central bank’s target, at 4.1%, in the first half of October, with price pressures likely to ease and activity still weak, we think that …
22nd October 2020
Manufacturing recovery fading The 3.3% m/m rise in Mexico’s industrial production in August was largely driven by a delayed rebound in construction output. Manufacturing production only rose by 0.8%, and more timely indicators suggest the sector will …
12th October 2020
Food inflation surges, Copom unlikely to be troubled The jump in Brazilian inflation, to 3.1% y/y in September, was almost entirely driven by surging food inflation. Food inflation is likely to continue putting upward pressure on the headline rate in the …
9th October 2020
More Banxico easing on the cards The stabilisation in Mexican inflation at 4.0%, after four successive monthly rises, should dampen hawkish sentiment at Mexico’s central bank. We think there is scope for at least one more 25bp rate cut, which is a more …
8th October 2020
Nearing pre-crisis levels The 3.2% m/m rise in Brazilian industrial production suggests that the sector has now returned to close to its pre-crisis level of output. But the data also provide some early confirmation that the surveys for the sector (which …
2nd October 2020
Higher inflation won’t yet put an end to the easing cycle The further rise in Mexican inflation, to 4.1% over the first half of September, was mainly driven by higher food and fuel prices. We suspect that the central bank will look past this and cut its …
24th September 2020
Food price spike drives headline rate up The further rise in Brazilian food inflation pushed up the headline rate to 2.7% y/y in the first half of September but, with core inflation still extremely soft, we doubt the central bank will be concerned. …
23rd September 2020
Industrial rebound losing momentum The marked slowdown in Mexico’s industrial production growth from 17.9% m/m in June to 6.9% m/m in July suggests the economic recovery was losing momentum at the start of Q3 – a trend which we expect to continue. This …
11th September 2020
Inflation rises, but central banks won’t be too alarmed Brazilian inflation remained well below the central bank’s target last month, at 2.4% y/y, confirming that price pressures are soft and supporting our view that the Selic rate will stay low for a …
9th September 2020
Industry making up lost ground quickly The stronger-than-expected 8.0% m/m rise in Brazilian industrial production in July adds to signs that the economy has recovered strongly in Q3. But with fiscal austerity likely to kick in next year, the pace of …
3rd September 2020
A slow recovery ahead The Brazilian Q2 GDP data, which showed a 9.7% q/q fall in output, confirmed that the country suffered one of the more modest downturns in Latin America. But with fiscal policy set to turn from a tailwind to a headwind, the pace of …
1st September 2020
Copom unlikely to ease further despite weak inflation The further rise in Brazilian inflation, to 2.3% y/y in the first half August, was relatively modest and we expect the headline rate to remain well below the central bank’s 2020 target of 4% over the …
25th August 2020
Banxico set to slow pace of easing The rise in Mexican inflation to 4.0% in the first half of August, the upper end of Banxico’s target range, will probably prompt the central bank to slow the pace of its easing cycle. But with inflation set to drop back …
24th August 2020
Recovery set to strengthen The 13.2% q/q contraction in Chile’s economy in Q2 appears to have been followed by a only a weak rebound in July but, with policymakers finally starting to get a grip on the coronavirus, the recovery from Q4 should be the …
18th August 2020
Industrial rebound taking shape The solid 17.9% m/m rebound in Mexican industrial production in June was largely driven by the reopening of auto factories. While production appears to have strengthened in July, further gains will probably be more muted. …
11th August 2020
Rising inflation won’t deter dovish central banks The rise in Brazilian inflation to 2.3% y/y in July is unlikely to worry the central bank and, with the economy still very weak, we expect the Selic rate to stay at its current historic low through this …
7th August 2020
Industry leads the recovery The 8.9% m/m rise in Brazilian industrial production in June and the jump in surveys for July highlight that the sector is recovering surprisingly quickly. But output is still well below its February peak and other parts of the …
4th August 2020
Massive slump to be followed by weak recovery The 17.3% q/q slump in Mexico’s GDP in Q2 is likely to be one of the largest peak-to-trough falls in the emerging world. With the country still battling with its coronavirus outbreak, and the US recovery …
30th July 2020
Weak inflation leaves door open to another rate cut The softer-than-expected Brazilian mid-month inflation reading for July, of 2.1% y/y, suggests that there is still scope for another interest rate cut in the current cycle. We expect a 25bp reduction in …
24th July 2020
Rising inflation unlikely to stop further Banxico easing We don’t think that the further rise in Mexican inflation to 3.6% y/y in the first half of July will be a major cause for concern for the central bank. Policymakers are likely to focus on the …
23rd July 2020
Industrial collapse continues The further fall in Mexico’s industrial production in May reinforces our view that GDP suffered a double-digit slump in Q2 (in q/q terms), and suggests that the recovery is lagging those in the rest of the world. After a …
10th July 2020
Rising inflation shouldn’t worry Banxico The further rise in Mexican inflation to 3.3% y/y in June, from 2.8% y/y in May, was largely driven by higher fuel prices. We think this trend has a bit further to run, although it is unlikely to deter the central …
9th July 2020
Recovery weak in May, but strengthened in June Brazil’s industrial sector only recovered a small share of its coronavirus-related losses in May, with continued weakness the auto sector one key factor. While surveys suggest that the data for June will be a …
2nd July 2020
Below-target inflation leaves room for another rate cut Brazil’s broadly steady mid-month inflation reading for June, of 1.9% y/y, masked the fact that a rise in food inflation offset falls in inflation in most other price categories. Weak price pressures …
25th June 2020
Rising inflation doesn’t preclude further rate cuts The rise in Mexican headline inflation to 3.2% y/y in the middle of June will keep policymakers in a cautious mood – something that’s likely to be reflected in the tone of the statement from tomorrow’s …
24th June 2020
Industrial collapse may prompt additional stimulus The 25.1% m/m collapse in Mexico’s industrial production in April suggests that Mexico’s economy suffered a hefty blow in Q2. Although this may mark the bottom for industry, it will add pressure for …
11th June 2020
Inflation at lowest rate in over 20 years The decline in Brazilian inflation to a multi-decade low of 1.9% y/y in May will give Copom plenty of room to cut interest rates when it meets next week. We’ve pencilled in a 50bp cut at that meeting, to 2.50%, …
10th June 2020
Rising inflation unlikely to throw Banxico off course The pick-up in Mexican inflation to 2.8% y/y in May, from 2.2% y/y in April, is unlikely to deter the central bank from continuing its easing cycle. We expect a 50bp rate cut at its meeting later this …
9th June 2020
Worst industrial figure on record The 18.8% m/m fall in Brazilian industrial production in April was not as calamitous as we and most others had feared, but it still highlights that GDP will fall dramatically in Q2 – perhaps by 10-12% q/q. It will also …
3rd June 2020
Stumbling even in Q1 The 1.5% q/q fall in Brazilian GDP in Q1 highlights that the economy had slipped into a deep downturn by March, even though the country was slow to impose lockdown measures. And more timely figures point to a double-digit fall in GDP …
29th May 2020
Lowest inflation since 1999 The fall in Brazilian inflation to just 2.0% y/y in the first half of this month provides plenty of space for Copom to follow up this month’s 75bp interest rate cut with more easing. For now, we have pencilled in one final 50bp …
26th May 2020
Jump in inflation will spook Banxico The larger-than-expected rise in Mexican inflation in the first half of May, to 2.8% (from 2.1% in April), may prompt the central bank to slow the pace of easing (or even pause its cycle) at next month’s meeting. …
22nd May 2020
Chile’s recovery to be short-lived While Chile’s economy grew strongly in Q1, this was largely due to favourable base effects resulting from strikes in Q4, and hides a sharp deterioration in activity in March. We expect a steep contraction in Q2, and a …
18th May 2020
Things are about to get a whole lot worse The 5% y/y drop in Mexican industrial production in March is largely old news, but the breakdown of the headline figure was more noteworthy and suggests that the manufacturing sector has been hit harder than …
12th May 2020
Inflation collapses, 100bp cut on the cards this month The large fall in Mexican inflation to just 2.2% y/y in April (from 3.2% y/y in March) should embolden the central bank to step up the easing cycle when it meets later this month. We’ve pencilled in a …
7th May 2020
Bad Q1 to be followed by Q2 slump The 1.6% q/q drop in Mexico’s GDP in Q1 was slightly better than many had expected, but the outturn in Q2 is likely to be much worse. We expect an 8% fall in GDP over this year as a whole – one of the worst in the …
30th April 2020
Low inflation opens door for a 50bp cut The decline in Brazilian inflation to 2.9% y/y in the first half of April suggests that Copom will be able to lower the Selic rate by an additional 50bp (to 3.25%) next week. The political crisis and in the recent …
28th April 2020
Lowest inflation on record, larger rate cuts in store The collapse in Mexican inflation to just 2.1% y/y in the first half of April will give Banxico more space to support the economy. It looks increasingly likely that the central bank will follow up this …
23rd April 2020
Large fall in inflation means Copom to ease further The larger-than-expected fall in Brazilian inflation, to 3.3% y/y last month, adds to reasons to think that Copom will cut the policy rate by another 50bp (to 3.25%) when it meets in early May. The …
9th April 2020
Inflation easing, more rate cuts on the way The larger than expected fall in Mexican inflation in March, to 3.3% y/y, should ease near-term concerns at the central bank about the impact of the weakness of the peso on prices. More importantly, with the …
7th April 2020
Weaker inflation gives scope for more Copom easing The further fall in Brazilian inflation in the middle of March will allow the central bank to lower the Selic rate by a further 50bp in the near term. But the scope for aggressive easing is limited. The …
25th March 2020
Above-target inflation won’t prevent further Banxico cuts Despite Mexican inflation remaining above target in early March, we think that Banxico will follow up its emergency 50bp rate cut last week with around 200bp of further easing in the coming …
24th March 2020