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Colombia: inflation worries taking centre stage We had warned a few weeks ago that Colombia’s central bank (BanRep) was too sanguine on inflation risks and this week’s communications suggest that policymakers are coming round to our view. At last …
5th May 2023
Panic stations in Argentina Developments in Argentina have taken a(nother) turn for the worse over the past couple of weeks. March’s grim inflation print (of 104% y/y) alongside rumours of an imminent devaluation and plans to renegotiate the country’s IMF …
28th April 2023
Brazil’s new fiscal plans: taking a step forward Brazil’s government presented the new planned fiscal framework to congress this week and the expectations are that it will progress quickly to a vote. We covered the framework when it was first announced …
21st April 2023
Lula’s 3.0: an inauspicious start Brazil’s president Lula marked his first 100 days in office this week and, while there’s been a bit more enthusiasm from investors for Brazilian assets in the past few days, there hasn’t really been much for investors to …
14th April 2023
Argentina-IMF: targets a hard ask A read between the lines of the IMF’s Fourth Review of Argentina’s $44bn Extended Fund Facility suggests that the deal could be starting to fray at the seams. To start with, the government and the IMF don’t appear to be …
6th April 2023
Copom’s minutes will leave a sour taste for Lula The minutes from last week’s Copom meeting , released on Tuesday, will have dashed any hopes (not least in the government) that policymakers might turn to interest rate cuts any time soon. Three points …
31st March 2023
Note: Join our 6th April online briefing all about the risks to EMs from banking turmoil. Register now . China and Brazil are taking steps to allow bilateral trade to be settled in renminbi rather than US dollars. The Brazilian branch of ICBC will …
Bolivia walking into a crisis Bolivia’s balance of payments problems entered a more acute phase this week. Commercial banks stopped providing FX to residents, forcing the central bank to do so itself. And there was some doubt (now resolved) whether the …
24th March 2023
SVB, Credit Suisse and Latin America Concerns about the health of the global banking system following the collapse of Silicon Valley Bank (SVB) and problems at Credit Suisse have triggered a sharp-sell off in Latin American financial markets this week …
17th March 2023
Brazil: is a Q2 rate cut plausible? The prevailing monetary policy story in Brazil so far this year has been one of ‘higher for longer’. We set out such a view recently , the BCB’s communications point this way and analyst expectations have shifted up. A …
10th March 2023
Mixed labour market signals Labour market data released this week from Brazil, Chile and Colombia flew under the radar, but they provide a useful guide to inflation risks. The common theme is that labour markets are losing steam amid an economic slowdown. …
3rd March 2023
Argentina-IMF relations set for a rockier phase Argentine officials headed to Washington this week to discuss the fourth review of the country’s IMF deal. The good news is that Argentina is likely to have met last year’s performance criteria, which …
24th February 2023
Colombia: here comes the state Concerns about the direction of policymaking under President Petro have once again lead to a sharp sell-off in Colombia’s financial markets this week. The catalyst this time was the government’s health reform bill, which was …
17th February 2023
Core inflation worries prompt hawkish response This week’s central bank communications suggest that worries about strong underlying price pressures are putting policymakers in a more hawkish mood than we had anticipated. Admittedly, Peru is something of …
10th February 2023
Survey data point to weak start to 2023 Data published this week provided the first signs of how the region’s economies fared at the start of this year. And it’s not good news. In Brazil, the FGV confidence indicators all dropped back in January, with …
3rd February 2023
Common currency talk highlights dollar concerns The week kicked off with the surprise news that Argentina and Brazil are looking at establishing a common currency to facilitate trade between the two countries. Further reports have clarified that, rather …
27th January 2023
Brazil: watch the labour market Lula has continued to spook investors in Brazil. This week he once again disparaged the focus on fiscal responsibility and also questioned the benefits of central bank independence. And more market-friendly words from his …
20th January 2023
Brazil riots: reflecting on the fallout The riots in Brasília last Sunday thankfully ended quickly. And the country’s financial markets, after losing ground on Monday, have rebounded over the course of this week. Investors have been buoyed by the fact …
13th January 2023
A worrying first week of Lula’s presidency The biggest event in the region this week was the inauguration of Brazil’s president Lula on 1 st January. And his first actions (and those of some of his cabinet) provide reasons for investors to be concerned …
6th January 2023
A year to write home about 2022 was in many ways a memorable year for Latin America. With Argentina’s World Cup victory the trophy returned to Latin America for the first time in 20 years. And it’s been a good year off the pitch too. GDP growth has …
23rd December 2022
Chile’s constitutional re-write: Attempt number two After three months of intense negotiations, Chile’s government and opposition parties agreed on a new process to re-write the constitution. This differs from the previous one (which led to a draft …
16th December 2022
Political chaos rattles Peru It’s been a tumultuous week in Peru that culminated in the ousting of left-wing President Pedro Castillo on Wednesday after he attempted to stage a “self-coup”. He was arrested on charges of rebellion and conspiracy (and …
9th December 2022
Venezuela: a baby step towards boosting oil output A meeting between the Venezuelan government and the opposition last weekend prompted the US to take the first steps towards easing sanctions. But there’s still a long way to go before sanctions are …
2nd December 2022
Lula’s spending cap exemption plans spook markets Brazil’s financial markets remained on the backfoot this week as the Lula team stepped up its fight against the spending cap. And, while officials have since tried to reassure investors, the developments …
18th November 2022
Lula starting to show his true colours? Developments this week poured cold water on the rally in Brazil’s financial markets that followed Lula’s election victory. Comments from Lula himself yesterday suggesting that higher spending should be prioritised …
11th November 2022
Lula’s early moves: tacking to the centre? Lula emerged victorious in Brazil’s presidential election last Sunday and political developments since then will have reassured investors. While President Bolsonaro didn’t concede defeat, he has accepted the …
4th November 2022
The second-round of Brazil’s presidential election on Sunday is going down to the wire. While Lula came top in the first-round vote earlier this month, the key story was that incumbent president Jair Bolsonaro received more support than had been expected. …
28th October 2022
Chile three years after the social uprising This week marked the third anniversary of a large wave of protests in Chile which, while ostensibly triggered by a rise in metro ticket prices, marked a watershed moment in Chile’s modern history and left …
21st October 2022
Central banks bringing things to a close This week, Chile ’s central bank became the latest in the region to end its rate hiking cycle. The statement accompanying its 50bp policy rate hike, to 11.25%, on Wednesday mentioned that the policy rate “has …
14th October 2022
Bolsonaro strong, but Lula still the front-runner The main story in Brazil’s general election on Sunday was the stronger-than-expected performance of Jair Bolsonaro and his right-wing allies, which buoyed the country’s financial markets. The real is up by …
7th October 2022
All eyes will be on Brazil’s general election on Sunday. Among other things, we’ve written about the implications of the vote for the economy, what lessons to draw from Lula’s previous presidency, and the future of Brazil’s fiscal rules. All of our …
30th September 2022
Argentina’s second IMF review This week the IMF announced that a staff-level agreement has been reached with Argentina to release a $3.9bn tranche of the $44bn programme, which will help the government to continue external debt repayments (mainly to the …
23rd September 2022
Colombia: fiscal consolidation vs. inflation The Petro administration’s commitment to address costly energy subsidies is the fiscally responsible thing to do, but it will come at the expense of exacerbating the country’s inflation problem. Fuel …
16th September 2022
Chile and its constitution: back to square one While the surprisingly strong rejection of Chile’s proposed new constitution in Sunday’s referendum has eased some concerns about a radical shake up of the country’s economic model, the outcome doesn’t put an …
9th September 2022
Brazil: will the consumer surge last? One of the most striking features in Brazil’s Q2 GDP release this week was the stellar performance of household consumption, which rose by 2.6% q/q – a figure bettered only six times in the GDP series’ …
2nd September 2022
Current account deficits and the pesos’ divergence Current account figures released this week go a long way to explaining the starkly different performance between the Mexican and the Chilean pesos. Data from Mexico showed that, while the current account …
26th August 2022
Lula & the state banks: déjà vu Brazil’s presidential election campaign officially kicked off this week with heated barbs between the leading candidates. On the economic front, one thing that has stood out is front-runner Lula’s focus on the role of …
19th August 2022
Colombia’s tax reform Colombia’s President Gustavo Petro was inaugurated last weekend and his economic team was quick to make their mark, presenting a new tax bill to congress. The bill seeks to add COP25trn (1.7% of GDP) to government coffers this year, …
12th August 2022
Costing Chile’s new constitution A recent report from Chile’s Centro de Estudios Públicos (CEP) that looks at the fiscal costs implied by the draft new constitution has made a splash this week. It estimates that the total annual cost for the government of …
5th August 2022
Big challenges for Argentina’s new “superminister” President Alberto Fernández announced a major cabinet reshuffle yesterday in an effort to tackle the latest economic crisis. One of the casualties of the reshuffle is Silvina Batakis, who had taken over …
29th July 2022
Colombia’s gaping trade deficit Recently released trade data showed that, somewhat surprisingly, Colombia’s trade deficit widened in May. This was driven by two factors. First, having jumped in April due to the surge in global energy prices, exports …
22nd July 2022
Brazil’s ‘kamikaze’ social transfers Brazil’s fiscal rules took another blow this week after congress approved a constitutional amendment (the so-called ‘kamikaze’ amendment) that will expand social transfers. Spending will increase by 41bn reais, or 0.4% …
15th July 2022
Argentina: not budging on the peso The UK isn’t the only country suffering tumult sparked by a finance minister’s resignation. Earlier in the week, Argentina was thrown into crisis after Martin Gúzman, the architect of the country’s latest IMF deal, …
8th July 2022
Petro picks a moderate The news that Colombia’s President-elect Gustavo Petro has chosen José Antonio Ocampo as his finance minister provides an early sign that Petro will govern as an economic moderate. Mr Ocampo is a well-respected economist, a former …
1st July 2022
Petro gets a frosty reception Gustavo Petro’s win in Colombia’s presidential election has caused tremors in the country’s financial markets. The stock market has fallen by around 7% since the vote while the currency is down by 5% against the dollar. The …
24th June 2022
Banxico set to follow the Fed Given the Fed’s hawkish shift and the recent sell-off in the Mexican peso, we now think that Banxico will step up the pace of tightening with a 75bp rate hike next week, to 7.75%. We argued a few weeks ago that the upcoming …
17th June 2022
Argentina-IMF: inflationary elephant in the room The staff-level agreement between the IMF and Argentina, for the first review of its $44bn deal, gave little assurance that the Fund will knuckle down on the country’s growing inflation and currency issues. …
10th June 2022
Colombia election: may be too early to cheer Populist Rodolfo Hernández is now the favourite to become Colombia’s next president and this has buoyed local financial markets this week. But we think that the scope for a further rally is limited. To recap, …
1st June 2022
Another Petrobras CEO gone The news this week that Brazil’s President Bolsonaro sacked the CEO of oil giant Petrobras, José Mauro Coelho, provides a worrying sign about the direction of policymaking in the run-up to October’s elections. Mr. Coelho became …
27th May 2022
Chile: moving towards a bigger state Some of the doubts over Chile’s political system have eased after the Constitutional Convention completed a draft of the new charter. But political risks remain high for now, which may keep the Chilean peso on the …
20th May 2022