- In one line: No surprises; on hold at the next meeting in May.
Andres Abadia (Senior International Economist)Latin America
- Brazil — Political chaos will have a limited effect
- Mexico — A solid start to the year
- Peru — Ignoring once again another political crisis
Andres Abadia (Senior International Economist)Latin America
- Monetary tightening is now drawing to a close in LatAm, as inflation is finally falling.
- BanRep increased the main rate by 100bp to 12.0% last week, but said the end of the tightening is near.
- Elevated inflation will mean that policy will stay tight over H1, after January’s final 50bp.
Andres Abadia (Senior International Economist)Latin America
- IIn one line: Rates on hold; the COPOM will remain cautious.
Andres Abadia (Senior International Economist)Latin America
Brazil’s real GDP has risen for a fifth consecutive quarter; output is about 5% above pre-Covid level...
...But the balance of risks for 2023 is to the downside, due mainly to increased fiscal threats.
Policy uncertainty could keep interest rates high for even longer, and the global economy won’t help.
Andres Abadia (Senior International Economist)Latin America
- Colombia’s President had a decent first 100 days in office, with the tax reform as a key achievement...
- ...But conflicting signals, between radicalism and orthodoxy, have hurt and will keep investors on alert.
- BanRep is likely to raise the policy interest rate further, owing to persistent price pressures.
Andres Abadia (Senior International Economist)Latin America
- The market is watching for signs of policy orthodoxy in Brazil as a new economic team is appointed.
- Inflation continues to fall rapidly, thanks chiefly to the lagged effect of tax cuts; will the downtrend continue?
- Retail sales firmed at the end of Q3, thanks mainly to falling inflation and a resilient job market.
Andres Abadia (Senior International Economist)Latin America
- In one line: Rates on hold but policymakers remain vigilant.
Andres Abadia (Senior International Economist)Latin America
- Brazil’s Lula took the lead in a surprising first round of the presidential election; the runoff is up for grabs.
- The results confirmed Lula’s lead in all polls, but they failed to catch the strength of Bolsonaro’s bounce.
- Bolsonaro’s strong momentum gives him an edge, but a more moderate Lula also bodes well for assets.
Andres Abadia (Senior International Economist)Latin America
- Mexico’s economy was resilient at the start of Q3, thanks to improving manufacturing activity...
- ...But sentiment indicators and survey data suggest that a slowdown will probably emerge soon.
- Brazil’s eternal accounts remain healthy, despite the recent deterioration on a sequential basis.
Andres Abadia (Senior International Economist)Latin America
- Brazil’s COPOM ends the tightening cycle, as inflation is finally cooling, thanks mainly to tax cuts...
- ...But it was a split and hawkish decision, and rate cuts won’t be on the table anytime soon.
- Inflation pressures persist in Mexico, particularly at the core level, but not for much longer.
Andres Abadia (Senior International Economist)Latin America
- Brazil — Lula’s lead over Bolsonaro holds
- Chile — What is next for the constitutional process?
- Peru — The new Finance Minister is taking action
Andres Abadia (Senior International Economist)Latin America
- Colombia's economic activity index confirmed that the recovery stalled in July, due to high inflation.
- Growth momentum will continue to peter out in the very near term; conditions likely will stabilise in Q4.
- The COPOM likely will keep the Selic rate on hold today, and throughout the remainder of the year.
Andres Abadia (Senior International Economist)Latin America
- Leftist ex-president Lula remains the frontrunner in Brazil’s presidential race, but the gap is narrowing.
- Mr. Bolsonaro’s recent economic policies, including tax relief and increased fiscal aid, are paying-off, just.
- The race is up for grabs, but we expect no radical change in economic policy, regardless of who wins.
Andres Abadia (Senior International Economist)Latin America
- Colombia’s economy started Q3 on a weak footing, as high inflation weighs on consumers’ spending.
- Peru’s economic recovery stalled in July and leading indicators point to further weakness in the near term.
- Weakening growth momentum will force central banks to stop hiking rates, assuming inflation cedes.
Andres Abadia (Senior International Economist)Latin America
- Mexico’s industrial sector has remained relatively resilient, thanks chiefly to strength in manufacturing.
- Construction and mining/oil remain in the doldrums; AMLO’s policies are holding them back.
- The public finances remain the bright spot in Mexico, but next year's budget assumes too rosy an outlook.
Andres Abadia (Senior International Economist)Latin America
- Inflation in Mexico rose in August, meeting expectations, allowing Banxico to hike by 50bp this month.
- The inflation picture remains ugly in Chile, but the recession likely will push it down in Q4.
- The BCCh surprised markets by increasing the main rate by 100bp, but it adopted a neutral bias.
Andres Abadia (Senior International Economist)Latin America
- Inflation in Mexico likely hit a new multi-decade high in August, but likely conditions will improve soon.
- Inflation pressures in Peru are finally easing; the end of the BRCP’s tightening cycle is around the corner.
- Core inflation remains subdued, and a weakening domestic demand will help to push it lower in Q4.
Andres Abadia (Senior International Economist)Latin America
- China’s slowdown is bad news for LatAm, just as domestic demand suffers, due to high inflation.
- Industrial output in Brazil remains resilient, but growth momentum will ease in the near term.
- The switch in consumers’ spending to services from goods and global economic slowdown will hurt.
Andres Abadia (Senior International Economist)Latin America
