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Latin America

Latin America Data Response

Latin America Data Response

Chile GDP (Q2)

Chile’s economy merely stagnated in Q2 and the chances are high that it will fall into recession over the second half of the year. Meanwhile, current account risks are continuing to build – with the deficit widening to more than 8% of GDP in Q2 – which will keep the peso on the backfoot.

18 August 2022

Latin America Data Response

Mexico Industrial Production (Jun.)

Mexico’s industrial sector posted sluggish growth of just 0.1% m/m in June and the data suggest that the first estimate of Q2 GDP growth may be revised down. The backdrop of weakness in the US means that we expect Mexican industrial activity to stay soft over the rest of this year. But that is unlikely to deter Banxico from delivering further monetary tightening, including another 75bp hike, to 8.50%, later today.

11 August 2022

Latin America Data Response

Brazil IPCA (Jul. 2022)

The sharp fall in Brazilian inflation to 10.1% y/y in July from 11.9% y/y in June was mainly a result of tax cuts on energy; inflation in most other price categories remains extremely strong. Even so, at the margin, this data release increases the likelihood that the central bank will keep interest rates unchanged (rather than opt for a final 25bp hike) at its next meeting in September.

9 August 2022
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Latin America Data Response

Mexico Consumer Prices (Jul.)

The rise in Mexico’s headline inflation rate to 8.2% y/y in July, coming alongside the stronger-than-expected Q2 GDP figures released in late-July, mean that Banxico is almost certain to hike interest rates by 75bp, to 8.50%, when it meets on Thursday. Inflation is set to remain above the 2-4% target range for some time and, as a result, we expect rates to be taken up to 10.00% by year-end.

Latin America Data Response

Brazil Industrial Production (Jun.)

The 0.4% m/m fall in Brazilian industrial production in June, taken together with softer surveys last month, provides further evidence that the economy is losing momentum. GDP growth in the second half of the year is set to be much weaker than in the first half. EM Drop-In (4th August, 10:00 ET/15:00 BST): Join our monthly online session on the big issues in emerging markets. In this 20-minute briefing, the team will be answering your questions about debt risks amid global tightening, the latest on the inflation outlook and much more. Register now. ​

Latin America Data Response

Mexico GDP (Q2 Prov.)

Provisional GDP figures show that Mexico’s economy grew by a stronger-than-expected 1.0% q/q in Q2 and we have nudged up our forecast for GDP growth this year to 2.3% (from 1.8% previously). Even so, the big picture is that weakness in the US and tight policy at home will weigh on growth over the coming quarters and Mexico’s recovery will continue to lag behind those in the rest of Latin America. EM Drop-In (4th August, 10:00 ET/15:00 BST): Join our monthly online session on the big issues in emerging markets. In this 20-minute briefing, the team will be answering your questions about debt risks amid global tightening, the latest on the inflation outlook and much more. Register now. ​

Latin America Data Response

Brazil IPCA-15 (July 2022)

The drop in inflation in Brazil to 11.4% y/y in the first half of July provides the first clear sign that inflation has passed its peak and is now on a downwards path. But even so, with the headline rate far above target and fiscal risks growing, Copom’s tightening cycle has a little further to run (we expect an additional 75bp of hikes to 14.00%) and interest rates will remain high well into next year.

Latin America Data Response

Mexico Bi-Weekly CPI (Jul.)

The further rise in Mexico’s headline inflation rate to 8.2% y/y in the first two weeks of July means that Banxico is all but certain to deliver another 75bp hike in interest rates, to 8.50%, at its next policy meeting in August. Inflation is probably now close to a peak but it will remain above the 2-4% target range for some time and, as a result, we expect rates to be taken up to 10.00% by end-2022.

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