- In one line: A soft end to the year, and H1 looks difficult; rate cuts are needed.
Andres Abadia (Senior International Economist)Latin America
- Real GDP growth in Mexico surprised to the down-side in Q4; tighter financial conditions are hurting.
- will be difficult in H1, with less support from the global economy and Banxico still cautious.
- Chile’s labour market performed well in December; further interest rate cuts will support the upturn.
Andres Abadia (Senior International Economist)Latin America
- In December, Mexico saw its biggest trade surplus since the pandemic, and the oil trade deficit stabilised.
- Auto exports improved at the margin in Q4, but down- side risks remain, due to sluggish external conditions.
- Will the strength of the labour market in 2023 continue over the coming quarters?
Andres Abadia (Senior International Economist)Latin America
- In one line: Disinflation continues; more good news to come.
Andres Abadia (Senior International Economist)Latin America
- Thursday’s triple threat of policy meetings in Brazil, Chile and Colombia is the main event this week.
- Will the rapid disinflation in Brazil allow the COPOM to accelerate the pace of easing this week?
- Similarly, in the Andes, policymakers will increase the magnitude of rate cuts, also thanks to rapid disinflation.
Andres Abadia (Senior International Economist)Latin America
- Economic activity in Mexico is struggling, particularly manufacturing and key services, as demand eases.
- The ongoing weakness of global conditions and high real interest rates will constrain growth during H1.
- Bad weather has foiled a promising disinflation story, though core pressures continue to ease rapidly.
Andres Abadia (Senior International Economist)Latin America
- In one line: Poor economic activity and soft core inflation pressures.
Andres Abadia (Senior International Economist)Latin America
- The IBC-BR for November shows Brazil’s economy is stagnating, despite rapidly falling inflation.
- Tight financial conditions will continue to keep a lid on activity, offsetting the boost from fiscal support.
- Business surveys are improving, signalling better momentum in Q2, if the COPOM acts boldly.
Andres Abadia (Senior International Economist)Latin America
- Colombia’s economy performed relatively well in November, and the outlook is improving; just.
- S&P lowered the country’s outlook to ‘negative’ from ‘stable’ due to the sluggish economic growth.
- A rating downgrade will likely be avoided, but President Petro’s policy missteps are a real threat.
Andres Abadia (Senior International Economist)Latin America
- In one line: Struggling, despite relatively positive sectoral data in November.
Andres Abadia (Senior International Economist)Latin America
- Activity in Mexico’s retail sector is slowing, despite falling inflation and a still-healthy labour market…
- …But rising real interest rates and softening remittances from abroad will constrain the sector.
- Consumers will likely become more cautious until key domestic and external threats disappear.
Andres Abadia (Senior International Economist)Latin America
- Retail sales in Brazil grew strongly in November, thanks mainly to the Black Friday boost.
- Lower inflation and a resilient labour market are also offsetting the drag from rising real interest rates.
- Economic activity was resilient in Q4, but downside forces will prevent a rapid upturn any time soon.
Andres Abadia (Senior International Economist)Latin America
- In one line: A good report, boosted by Black Friday sales.
Andres Abadia (Senior International Economist)Latin America
- Mexico — Presidential election hotting up
- Argentina — Pragmatic chainsaw switched on
- Chile — Pension reform continues to advance in Congress
Andres Abadia (Senior International Economist)Latin America
- Milei has been busy in his first month in charge of Argentina’s economy, but it hasn’t been easy.
- Inflation turned out a bit better than expected, at a still-ugly 211%, the highest since 1990.
- The IMF backed Milei’s economic plan, approving the next disbursement under the current deal.
Andres Abadia (Senior International Economist)Latin America
- Disinflation continues in Peru, as temporary shocks fade and domestic demand remains sluggish.
- We look for the BCRP to reduce rates to about 5% by the end of H1 2024...
- ...But risks to the inflation outlook have increased at the margin in recent days, particularly geopolitics.
Andres Abadia (Senior International Economist)Latin America
- Mexico’s industry is weakening, and risks are tilted to the downside as US manufacturing struggles.
- Construction activity is slowing, but this follows an impressive and unsustainable H1 2023.
- Geopolitical threats, alongside high interest rates and the US and Mexican elections, are the key risks.
Andres Abadia (Senior International Economist)Latin America
