Latin America Economics Weekly Could Copom cut (soon)? Chile’s tax reform We think that investors in Brazil are getting ahead of themselves by pricing in rate cuts as early as Q2. Despite February’s fall in inflation, core price pressures are still uncomfortably strong... 10th March 2023 · 5 mins read
Latin America Data Response Brazil IPCA (Feb. 2023) The further fall in Brazilian inflation, to 5.6% y/y in February, was driven mainly by a drop in food inflation. Core inflation pressures remain uncomfortably strong for the central bank, which... 10th March 2023 · 2 mins read
Emerging Markets Economics Update EM slowdowns and NPLs: lessons from the past Non-performing loan (NPL) ratios have risen by as much as 4-5%-pts during non-banking crisis downturns in EMs in the past. This time around, there are reasons to think that the increase will be... 6th March 2023 · 5 mins read
Latin America Economics Weekly Wage pressures, Mexico’s Tesla plant Labour market data released across the region this week flew under the radar, but the figures provide worrying signs that rapid wage growth in Brazil will continue to keep core inflation high. We take... 3rd March 2023 · 7 mins read
Latin America Data Response Brazil GDP (Q4 2022) The 0.2% q/q fall in Brazil’s GDP in Q4, which was driven by weakness in domestic demand, provides clear evidence that high interest rates are taking a heavier toll on the economy. Taken together with... 2nd March 2023 · 3 mins read
Latin America Economics Update Brazil: is a corporate debt crisis brewing? The dramatic rise in borrowing costs in Brazil in the past few years appears to be causing debt problems at a growing number of companies. So far at least, there is little evidence of widespread... 28th February 2023 · 4 mins read
Latin America Data Response Brazil IPCA-15 (February 2023) The fall in Brazilian inflation to 5.6% y/y in the first half of this month was driven by lower food inflation and won’t ease policymakers’ concerns about the strength of core inflation. We continue... 24th February 2023 · 2 mins read
Latin America Chart Pack External vulnerabilities to ease as growth weakens The latest data suggest that current account deficits in the region’s major economies narrowed towards the end of last year, which is particularly good news for Colombia and Chile. Both were running... 22nd February 2023 · 15 mins read
Emerging Markets Economics Update EM investment: weak outlook and clear divergence EM investment surged far above pre-pandemic levels last year, but there was a clear divergence across countries and we think investment growth will slow in 2023. One worrying development is that... 20th February 2023 · 4 mins read
Latin America Economics Weekly Petro spooks investors (once again), Brazil’s fiscal rule In Colombia, President Petro’s healthcare reform unveiled this week reinforces our concerns about a worsening public debt trajectory and more interventionist policymaking, and caused the peso to fall... 17th February 2023 · 6 mins read
Global Markets Update We expect equities in Brazil to continue to struggle We expect MSCI’s Brazil Index to drop over the next couple of quarters in local-currency terms, before it begins to recover towards the end of this year. 17th February 2023 · 3 mins read
Latin America Economics Weekly Hawks still rule the roost, BCB threats This week’s larger-than-expected interest rate hike in Mexico alongside comments from central bank officials elsewhere suggest that worries about strong underlying price pressures are putting... 10th February 2023 · 6 mins read
Latin America Data Response Brazil & Mexico CPI (Jan.) Mexico’s headline inflation rate edged up to 7.9% y/y in January, setting the scene for Banxico to raise interest rates by 25bp, to 10.75%, later today. We think that this will mark the end of the... 9th February 2023 · 2 mins read
Latin America Economics Update Lula and the threat to the BCB’s independence Brazil’s president Lula seems to be on the warpath in his quest for lower interest rates and now has the central bank’s (BCB’s) independence in his sights. Were Lula to get his way, the experience... 8th February 2023 · 3 mins read
Latin America Economics Update Brazil’s BNDES: new leader, old problems The newly-appointed head of the Brazilian development bank, BNDES, takes charge today and is likely to be under pressure to increase lending. But the experience from the 2000s suggests that credit... 6th February 2023 · 3 mins read
Latin America Economics Weekly Weak survey data, inflation concerns, rate forecasts The batch of survey data for January released this made for pretty depressing reading and reinforces our view that, despite the boost from commodities, regional growth will slow sharply this year... 3rd February 2023 · 7 mins read