- July activity was firm in Peru, but the slowdown narrative remains, due to increased political risk.
- Capex likely will suffer next year, if the government takes a misstep; a downtrend is already emerging.
- Chile's central bank minutes set the table for further bold rate hikes, neutrality is around the corner.
Andres Abadia (Senior International Economist)Latin America
- Brazil's economic upturn continued in Q3, but high inflation and tighter policy will dent the rebound soon.
- The Argentine president's nightmare worsens as his coalition tumbles and the economy deteriorates.
- Inflation is high, and sluggish demand, political risk and policy heterodoxy will limit the upturn.
Andres Abadia (Senior International Economist)Latin America
- Argentina's economic outlook and markets improve as the ruling party falters in BA province vote.
- Peru's BRCP increased interest rates last week; infla- tion rebounding on the back of the PEN sell-off.
- The door is open to further data-dependent hikes; politics and global volatility will force the Board to act.
Andres Abadia (Senior International Economist)Latin America
- Brazil's inflation surprises to the upside in August; the near-term outlook remains challenging.
- A sharp inflation rebound supports the case for interest rates above neutral in the near term.
- Inflation in Chile overshot expectations, again; the BCCh will deliver more tightening to tame pressures.
Andres Abadia (Senior International Economist)Latin America
- Increased inflation pressures and prospects of DM policy normalisation complicate LatAm policy.
- Inflation in Mexico slowed in August, thanks mainly to price controls, but core pressures are building up.
- The 2022 budget proposal signals a pledge to fiscal discipline, but some of the assumptions are shaky.
Andres Abadia (Senior International Economist)Latin America
- PMI surveys in Mexico suggest that momentum shifted lower in August, due to supply shocks.
- Consumer confidence deteriorated in Q3, on the back of the third Covid wave and high inflation.
- Fixed investment stalled in June, but the rec
Andres Abadia (Senior International Economist)Latin America
- Inflation in Colombia rose sharply in most of Q3, de- spite a stuttering economic rebound in H1.
- The FX sell-off and rising commodity prices will make life more difficult for behind-the-curve BanRep.
- The economic recovery stalled in Q2, due mainly to social unrest; it will improve soon.
Andres Abadia (Senior International Economist)Latin America
- The Chilean economy continues to surprise to the upside, and the good news will continue over Q4…
- …But risks are tilting to the downside due to higher inflation pressures and tighter economic policies.
- Peru's inflation rose sharply in August, due mainly to the lagged effect of the PEN's sell-of
Andres Abadia (Senior International Economist)Latin America
- New Covid-19 cases and hospitalizations continue to fall in most of LatAm; Mexico still lags.
- The Delta variant remains a key threat, so victory is still a way off, despite an improving vaccine rollout.
- Brazil's economic recovery continues, but rising inflation and supply shocks are a real threat.
Andres Abadia (Senior International Economist)Latin America
Consumers' spending in Brazil ended Q2 poorly, but it will improve soon as virus restrictions ease.
Mexico's industrial production fell in June, due mainly to the continued troubles in the auto sector.
Conditions will improve in the second half of the year, but supply-side disruptions will remain a drag.
Andres Abadia (Senior International Economist)Latin America
Mexico — Doing well, despite many challenges
Chile — Politics and copper prices cap the upturn
Peru — Political uncertainty will remain a drag
Andres Abadia (Senior International Economist)Latin America
- The jump in Brazil's IPCA inflation in July shows that temporary shocks are filtering through quickly.
- Inflation will remain well above the target range this year, forcing the COPOM to act boldly soon.
- Peru's central bank president agreed to continue in the post, boosting financial markets, for now.
Andres Abadia (Senior International Economist)Latin America
Mexico's core inflation is at cyclical highs and rising; the reopening of the economy is mostly responsible.
Inflation will stay well above Banxico's target range over H2, forcing policymakers to hike interest rates.
Fixed investment and private consumption continued to recover in Q2, the near-term outlook is positive.
Andres Abadia (Senior International Economist)Latin America
Brazil's BCB indicates that it will tighten beyond neu- tral levels as the inflation outlook deteriorates.
The COPOM's hawkish rhetoric is good news in terms of re-anchoring inflation expectations.
Peru's BCRP will increase the main rate next week as the currency slide fuels inflation.
Andres Abadia (Senior International Economist)Latin America
Peruvian New Sol — President Castillo already on fire
Chilean Peso —The copper-driven sell-off
Colombian Peso — Deteriorating fundamentals
Andres Abadia (Senior International Economist)Latin America
Brazilian industrial production ended Q2 on a soft footing, but leading indicators point to a decent H2.
That said, supply-side constraints and rising prices remain a big near-term threat for manufacturers.
Mexico’s PMI remained resilient in July, but a modest downtrend likely will emerge in Q3.
Andres Abadia (Senior International Economist)Latin America
Colombia’s central bank kept the main rate on hold, but the split Board introduced a clear hawkish tone.
Inflation is rising rapidly, and prospects remain grim; BanRep will hike rates next month.
Chile's economic recovery consolidated in June, thanks mainly to solid services activity.
Andres Abadia (Senior International Economist)Latin America
Mexico's economy gathered speed in Q2, thanks to solid services activity and despite one-off shocks.
Manufacturing activity has stalled, due to global supply issues, but conditions likely will stabilise soon.
Further good news from Chile's retail sector and manufacturing ended Q2 on a solid footing.
Andres Abadia (Senior International Economist)Latin America
As we move on into the second half of the year, theMexican economy looks poised for a sustained recovery, provided both private consumption and external demand momentum is sustained in the coming months.
Andres Abadia (Senior International Economist)Latin America
Chile's central bank has joined the bandwagon of monetary policy normalisation that started in the region with Brazil and Brigade has expanded, more recently, to Banxico.
Andres Abadia (Senior International Economist)Latin America
