Economic activity in Colombia remained resilient in February, but momentum will ease soon.
Retail sales performed strongly in February, but the drop in disposable income will be a drag in Q2.
High inflation and tighter financial conditions will be a drag soon; improving terms of trade will ease the hit.
Andres Abadia (Senior International Economist)Latin America
- COPOM minutes confirm that the end of the tightening is near, providing commodity prices stabilise.
- The Board announced an additional 100pb rate hike in May, but has left the door open for H2.
- Colombia's economic recovery stalled in January, due to Omicron and high inflation.
Andres Abadia (Senior International Economist)Latin America
- Colombia — Rising oil prices are a blessing, for now
- Peru — Markets continue to shrug off politics
- Mexico — Resilient, but near-term threats prevail
Andres Abadia (Senior International Economist)Latin America
- Chile's inflation undershot expectations in February, thanks to a sharp fall in services prices...
- ...But the good news won't last; upside risks prevail on the back of rising oil prices, and high indexation.
- The BCCh will continue to hike rates to avoid the spread of the energy shock into other prices.
Andres Abadia (Senior International Economist)Latin America
- The global inflation outlook continues to deteriorate and monetary tightening will need to be meaningful.
- Increasing inflation implies that central banks are likely to continue tightening rates, hurting activity.
- Inflation in Colombia validates our view of bold monetary tightening, despite the COP's rebound.
Andres Abadia (Senior International Economist)Latin America
- Brazilian Q4 GDP growth pleased markets, thanks to the reopening and modest fiscal support....
- ...But conditions have turned challenging for both investment and private consumption.
- Deteriorating confidence is the key threat to the up-turn, but we see no near-term catalyst for rebound.
Andres Abadia (Senior International Economist)Latin America
- February CPI inflation in Brazil and Mexico likely will maintain the pressure on policymakers.
- The disinflation trend likely will resume in March, but rising global oil prices are a big threat.
- Rising inflation expectations, and lingering core pressures, will force policymakers to hike soon.
Andres Abadia (Senior International Economist)Latin America
- Colombian GDP rose by a brisk 4.3% in Q4, due mainly to solid private consumption...
- ...But a consumer-led slowdown is coming; high inflation, and tighter financial conditions will be drags.
- The second half of the year likely will be better, but increased political/policy uncertainty is a key threat.
Andres Abadia (Senior International Economist)Latin America
- Commodity prices continue to rebound, which will help to ease LatAm's risk profile in the near term.
- The threat of a Russia-Ukraine war is supporting prices, but downside risks remain.
- High actual inflation and rising inflation expectations will force the BCRP to continue to tighten.
Andres Abadia (Senior International Economist)Latin America
- Brazil's economy muddled through the fourth quarter, but there's nothing to cheer about.
- The services economy performed strongly in Q4, but the near-term outlook remains challenging.
- Inflation surprised to the downside in January, but this won't bring any comfort to the COPOM.
Andres Abadia (Senior International Economist)Latin America
- Banxico delivers a bold rate hike, as core inflation pressures remain out of control.
- Inflation will continue to ease over the course of the year; a sluggish economic activity will help.
- The Fed's tightening likely will drive market volatility, but it probably won't be as bad as during 2015.
Andres Abadia (Senior International Economist)Latin America
- Brazil — A robust start to the year, but risks prevail
- Chile — A potential orthodox Boric appeases investors
- Peru — The rebound continues, despite politics
Andres Abadia (Senior International Economist)Latin America
- Brazil's COPOM delivered a more hawkish tone in its last minutes, but the pace of tightening will ease.
- Deteriorating fiscal conditions are a real concern, despite the sluggishness of the economic cycle.
- Inflation in Chile is rising rapidly, and we expect the uptrend to continue over H1; the BCCh will act soon.
Andres Abadia (Senior International Economist)Latin America
- Brazil's industrial sector managed to avert a technical recession, thanks to a solid upturn in December...
- ...But leading indicators are consistent with poor underlying momentum in economic activity in H1.
- The labour market recovery continued in Q4, but progress likely will stall in Q1, due to Omicron.
Andres Abadia (Senior International Economist)Latin America
- Brazil's COPOM delivered a well-telegraphed bold rate hike, aiming to push inflation expectations lower.
- It also sent a clear signal that it plans to reduce the pace of monetary tightening, as conditions improve.
- Brazil posted its first primary surplus since 2013, but the good news won't last.
Andres Abadia (Senior International Economist)Latin America
- Brazilian Real — A solid commodity-driven rally
- Colombian Peso — Supported by rising oil prices
- Chilean Peso — Political risks ease, for now
Andres Abadia (Senior International Economist)Latin America
- The Mexican recession likely will be short-lived, but the Omicron shock in Q1 is a big threat.
- GDP rose by 5.0% in 2021; we expect growth of close to 2.0% this year, but downside risks remain.
- Colombia's BanRep finally joins the hawkish party with a bold hike; more is around the corner.
Andres Abadia (Senior International Economist)Latin America
- Brazil's underlying inflation is trending down, albeit from high levels, on the back of many shocks.
- A sluggish economic recovery and tighter financial conditions will continue to push inflation down.
- The BCCh hiked interest rates boldly; hefty further tactical tightening looms if conditions deteriorate.
Andres Abadia (Senior International Economist)Latin America
- Mexican headline inflation continues to edge down, but it’s too soon for a dovish shift from Banxico.
- Core pressures persist and the near term remains tough, due to both external and domestic forces.
- Colombia's domestic demand recovery continues, but it is faltering in Peru, following a solid H1.
Andres Abadia (Senior International Economist)Latin America
- The recovery in commodity prices should strengthen LatAm public finances and external accounts.
- Capex will also rise this year, if the commodity uptrend is sustained; political risk, however, is a drag.
- A sustained rebound in prices would also keep inflation high, complicating some central banks' plans.
Andres Abadia (Senior International Economist)Latin America
