Narrower current account was supported by an improvement in the trade balance
Mining and construction sectors were the main drags to economic activity
Narrower current account was supported by an improvement in the trade balance
Headline inflation decelerated, dragged by non-core prices.
There are clear downside risks to our -1.4% GDP growth forecast for this year
The incoming administration will receive lower twin deficits, but the roll-over of debt will be challenging,
The real wage bill is still helping to smooth the slowdown in private consumption
The expected recovery for 2H19 would be lower.
New pulp mill boosts growth.
External headwinds will limit the pace of recovery ahead
Conforme el precio del cobre se mantenga bajo y la demanda doméstica débil, el déficit de cuenta corriente seguirá amplio.
Vientos en contra del entorno global limitarán el ritmo de recuperación
As copper prices stay low and domestic demand remains weak, we see the CAD remaining wide
We now see the policy rate ending this year at 7.25%
Inflation is likely to resume an upward trend
Aumentamos nuestra proyección de crecimiento para el año que viene a 2% desde 1,5% anteriormente.
Corregimos a la baja nuestra proyección de crecimiento a 1% para este año desde 1,7% anteriormente.
Local and global headwinds make a sustained recovery in 2H19 unlikely.
Non-natural and natural resources sectors decelerated in 2Q19
A meaningful activity acceleration in 2H19 remains elusive as consumer confidence stays low, the labor market weak and global growth slows.
With moderating global demand and low oil prices, we expect the CAD to remain wide, at 4.3% of GDP this year
Oil and construction output dragged industrial production
The BCRP didn’t close the door for additional cuts, but they are not granted.
Low core measures and our diffusion index point at contained inflationary pressures
Baja inflación subyacente y nuestro índice de difusión indican que las presiones inflacionarias están contenidas
Core inflation still sticky
La débil demanda mundial en medio de una demanda interna moderada conduciría a un déficit de cuenta corriente de 3,2% del PIB
Weak global demand amid limited domestic demand would keep the CAD above 3% of GDP
The intensity and endurance of the supply shocks likely mean that inflation would end this year at 3.75%.
Lingering uncertainties surrounding Mexico’s economy and transition effect will weight on investment outlook
A pesar de una base de comparación más favorable y de las medidas adicionales de estímulo monetario y fiscal, los vientos en contra limitarían la recuperación
Despite a more favorable base of comparison and added stimulus measures, sufficient headwinds would limit the recovery ahead
The board likely needs to see confirmation of weaker activity and a looser global monetary stance, so rate cuts in the near term seem unlikely
La baja confianza empresarial, un escenario externo volátil, los precios del cobre contenidos y un mercado laboral débil han resultado en una desaceleración
Low private confidence, a volatile external scenario, contained copper prices, and a weak labor market have resulted in an activity slowdown in 1H19
La probabilidad de un recorte de 50 pb ha aumentado, a raíz de los acontecimientos recientes.
The likelihood of a larger 50-bp cut in September has increased following recent developments
Widening output gap conditions curb inflationary pressures
Decepcionante manufactura apunta a debilidad en el consumo y la inversión, en línea con nuestra expectativa de crecimiento de 2,4% este año.
Although sequential GDP improved, economic activity remained soft in 2Q19
The MoF is considering using the stabilization fund to offset lower revenues in 2019
Poor manufacturing points to weak consumption and investment, in line with our 2,4% growth forecast for the year.
Despite stable unemployment, poor quality of job creation and falling participation are risks to consumption growth ahead.
Pese al desempleo estable, la baja calidad de la creación de empleo y la menor participación son un riesgo para el crecimiento del consumo hacia adelante.
In 2Q19, the participation rate dropped to the lowest level since 2Q10, containing a further surge in the unemployment rate
Monthly GDP was dragged by construction and mining
The shift in the trade balance is driven by falling imports.
At the margin, non-oil imports deteriorated, reflecting weakness in internal demand.
Confirmation of weaker-than-expected activity and a the looser global monetary stance needed before lowering rates
The negative impact of the severe drought in 2018 is in the past.
The real wage bill is a buffer for private consumption
Headline and core inflation slowed down, remaining below the upper bound of the range around central bank’s target.
Moderating global demand and low oil prices would keep the CAD wide
La decisión de julio se encuentra en línea con nuestra proyección de tasas más bajas (en 2%) a fin de año
July’s decision is in line with our expectation of lower rates (at 2%) by yearend.
Daniel Martínez, Luis Lacalle Pou and Ernesto Talvi will be the main contenders in the presidential elections.
We expect a new monetary policy interest rate cut of 25 bps, leaving the rate at 4.5% for the end of the year.
Las elecciones mostraron un resultado en línea con las últimas encuestas disponibles
Moderate disinflation will likely continue in July
La caída de la inflación y un ambiento externo más favorable abren espacio para un recorte de la tasa de referencia
Despite firm readings in May, the economy still faces significant headwinds
Real expenditure cuts continued to support fiscal consolidation.
At the margin, oil and construction output dragged industrial production
The majority of board members are still concerned about the evolution of core inflation
Core inflation still uncomfortable
En línea con nuestras perspectivas de un menor crecimiento este año, no esperamos una notable aceleración de la inflación.
As supply shocks fade, inflation is likely to retreat towards the central bank’s 3% target
Con crecimiento mundial débil y demanda doméstica limitada, el déficit de cuenta corriente se mantendría estable y amplio.
Given our outlook of a growth slowdown this year, we do not expect a notable acceleration of inflation
With low global and internal demand growth, the current account deficit is seen staying broadly stable and wide.
Lingering uncertainties surrounding Mexico’s economy will weight on investment outlook
El sentimiento privado negativo, un escenario mundial incierto y los precios del cobre contenidos justifican nuestro pronóstico de 2,4% de crecimiento este año
Downbeat private sentiment amid an uncertain global scenario justify our 2.4% growth call for this year
Esperamos otro registro del Imacec por debajo del potencial del 2,3% en mayo (2,1% en abril).
We expect another below potential Imacec print (monthly GDP proxy) of 2.3% in May (2.1% in April).
A widening output gap, controlled inflation and loosening global financial conditions will allow for lower rates ahead.
The loosening labor market, amid depressed sentiment point to weak consumption ahead.
Weaker growth in machinery and equipment manufacturing hints at an investment slowdown.
Dado el deterioro de las perspectivas de crecimiento para Chile, es poco probable que el mercado laboral se recupere significativamente.
El menor crecimiento en la fabricación de maquinaria y equipos sugiere una desaceleración en la inversión.
With the Chilean growth outlook deteriorating, the labor market is unlikely to improve meaningfully.
At the margin, non-oil imports deteriorated, reflecting weakness in internal demand.
We expect a trade surplus of USD 7.5 billion for 2019
We expect Banxico to deliver two 25-bp rate cuts in the last quarter of 2019
We note that the risks to our GDP growth forecast for the year (-1.4%) are still tilted to the downside
Services sectors deteriorated further, while manufacturing sector improved somewhat.
We lowered our GDP forecast for 2019 to 1.7% from 3% due to the drought and a scenario of decelerating regional and global growth.
Dado que mantenemos una perspectiva menos optimista para el crecimiento (y, así, una inflación moderada hacia adelante), esperamos mayor estímulo monetario.
We lowered our GDP growth projections to 0.5% for 2019 (from 0.7%) and 1.5% for 2020 (from 2%).
A widening output gap and controlled inflation would likely lead the central bank to cut rates.
Given we hold a less optimistic outlook on growth (and hence subdued inflation ahead), we expect further easing.
Headline inflation reached the upper bound of the range around central bank’s target.
Due to the transitory uptick in imports, further widening of the trade deficit is not expected
Public and private spending weakened, while exports decelerated
The decline was in line with expectations.
Recortamos nuestra proyección de crecimiento a 1,7% para 2019 desde 3% por la sequía
Redujimos nuestra proyección de crecimiento del PIB para 2019 y 2020 a 0,5% y 1,5% desde 0,7% y 2%, respectivamente,
Economic activity in April was dragged mainly by fishing output
Weak activity in the first third of the year suggests the impact of weakening global growth could be filtering through to the Colombian
The BCRP highlights softer economic activity
Lower volatility of the exchange rate and tight monetary policy contributed to a modest disinflation
Manufacturing output momentum improved somewhat
With growth risks that are seen tilted to the downside, the central bank left the door open for additional easing.
Con debilidad de la demanda global y bajos precios del cobre hacia adelante dado el escalamiento de la guerra comercial, hay riesgos alcistas.
On an annual basis, headline and core inflation decelerated to still-high levels
Aun cuando el banco central no anticipa bajas adicionales, vemos espacio para recortes por otros 50pb, llevando la TPM a 2%.
Conforme bajan los precios del petróleo y la demanda doméstica se mantiene contenida, esperamos un alza gradual de la inflación hacia adelante.
Although the central bank does not signal further rate cuts, we see room for an additional 50bps of easing to 2%.
As oil price gains unwind, while domestic demand growth is restrained, we expect a gradual inflation rise ahead
With reduced global demand and low copper prices ahead amid the escalating trade war, there are upside CAD risks
Manageable inflation and a widening output gap opens the door for the central bank to consider additional monetary easing
A recovery of GFI is unlikely to be lasting due to a high uncertainty environment
Amid a challenging global scenario and terms-of-trade that would likely deteriorate, the current account deficit would remain wide this year.
Activity in the primary sector is expected to improve ahead but we see clear downside risks to our 3% growth outlook.
La actividad en el sector primario mejoraría hacia adelante, pero vemos claros riesgos a la baja para nuestra proyección de crecimiento del 3%.
CPI was pressured mainly by non-core items
El escenario externo cada vez más complejo está dando lugar a una creciente incertidumbre doméstica.
The increasingly complex external scenario is resulting in growing domestic uncertainty
La robusta actividad de maquinaria y equipos, junto a una sólida constricción en el 1T19, son un buen augurio para la recuperación de la inversión
A medida que los vientos en contra para las perspectivas de Chile aumentan, es poco probable que la tasa de desempleo se reduzca significativamente.
As headwinds pick up, it is unlikely the unemployment rate would narrow significantly from the 7% recorded last year
Robust machinery and equipment activity along with solid construction activity in 1Q19 bodes well for the investment recovery
Falling participation and overall job shedding does not bode well for consumption dynamism ahead.
Most members believe there are still significant risks for inflation, despite greater economic activity slack
The balance of risks for inflation is titled to the upside
The introduction of rate cuts into the discussion highlights the potential change in course ahead
La introducción de recortes de tasas en la discusión destaca la posibilidad de cambios en la guía de política monetaria.
At the margin, manufacturing exports and non-oil imports weakened
Final domestic demand was dragged mainly by a fall of public demand
Industrial and services sectors weakened
Net direct investment deteriorated in the 1Q19, although it was still enough to cover the CAD
The adjustment of external accounts is on track.
Headline inflation is still above the upper bound of the range around central bank’s target
The risk to our base-case economic scenario for 2019 remains tilted to the downside
higher real wages are a buffer for private consumption
Pesimismo del sector privado y la desaceleración de la economía mundial implican que los riesgos se inclinan a la baja.
El financiamiento del déficit es complicado ya que los flujos de inversión extranjera directa se mantuvieron bajos.
Depressed private sentiment and a slowing global economy mean Chile’s growth risks are tilted to the downside
Financing the CAD remains complicated as inflows of direct investment stay low
The decline in activity was caused by a weaker agriculture performance.
Leading indicators suggest weak GDP growth in 1Q19.
The balance of risks for inflation continues to be tilted to the upside.
Economic activity in 1Q19 was dragged by fishing and construction output
We expect activity to improve from last year, but downside risks to our outlook are rising
Inflation is expected to continue falling in May.
Robust sector indicators and strong imports of capital goods are consistent with GDP growth of 3.4% in 1Q19.
Weaker global economy and some internal demand recovery would prevent a correction of external accounts.
Aumento en las tensiones globales estarían motivando mayor cautela al interior del consejo.
Raising global tensions may be motivating additional caution within the board.
Trade wars on BCRP radar again.
Manufacturing output decelerated on an annual basis
The Easter effect partially faded away in the 2H of April
Contained inflationary pressures and sluggish activity justify stable rates
Contained inflationary pressures and sluggish activity justify stable rates
La composición de las importaciones parcialmente mitiga las vulnerabilidades externas
The composition of imports partly mitigates external vulnerabilities
Uncertainty over the direction of domestic policy and the approval of the USMCA will continue to weigh on investment outlook
We expect inflation to end the year at 3.0% target, however, there are upside risks
La moderación reciente de la confianza empresarial y de los consumidores en medio de riesgos externos elevados
Moderating business and consumer confidence amid elevated global risks pose a growing risk to our 2019 growth scenario
The ongoing, but slow, activity recovery is concerning some board members.
A pesar de la baja inflación y una política monetaria expansiva, el consumo privado se está debilitando
Despite low inflation and an expansionary monetary policy, private consumption related activity is weakening
Lower oil production and weak growth are the main risks to public finances
CPI was driven by an increase in prices of bus transportation, tourism related services and seafood due to Easter holidays
On an annual basis, Industrial sector contracted, while services sectors moderated its pace
A pesar de la débil actividad industrial, las perspectivas para la inversión son positivas.
While there are some positives, the labor market remains weak
Despite weak industrial activity, the investment outlook remains positive.
The risks to our base-case economic scenario for 2019 are high.
In an environment of low inflation and expansionary monetary policy, we expect employment to improve gradually
Industrial and services sectors slowed down
Manufacturing exports and non-oil imports improved at the margin, but grew at a soft pace
Additional widening in the CAD or tightening of financial conditions could change the mood in the board
Higher real wages are a buffer for private consumption
CPI was pressured by an increase in prices of tourism related services and airfares due to Easter holidays
Weak activity and currency lead to a rapid adjustment.
We note an upward risk to our forecast of a deficit of 0.5% of GDP
Still weak energy exports is offsetting the moderation in imports.
Low inflation allowed monetary-policy easing
Inflation remains above the target range.
The bar for foreign exchange sales by the central bank is now lower
The central bank has gone fully neutral
Fishing, construction and metallic mining output were the main drags to economic activity
El consejo asumió postura neutral
April’s communique tone remained practically unchanged compared to last month statement
Manufacturing sector fell on a quarter-over-quarter basis
However, deputy governor Esquivel advocated for a more neutral tone in the policy statement.
Core inflation remained practically unchanged compared to last month
We expect economic activity to slow to 1.4% in 2019 (from 2018: 2.0%)
Weakening industrial export dynamics reflect the slowing global economy
Las exportaciones mineras siguen siendo el principal lastre de las exportaciones, pero la dinámica industrial refleja la desaceleración de la economía mundial.
Una moderación de las presiones inflacionarias bajistas está en línea con visión de que baja inflación es transitoria
As the food price uptick passes, inflation would return towards the 3% target.
A moderation in downside inflationary pressures is in line with the view that low inflation is transitory
La debilidad de la minería se debe a factores transitorios.
Mining activity was affected by transitory factors
Tasas bajas y un período prolongado de inflación moderada ayudarían al dinamismo minorista hacia adelante.
Low rates and a prolonged period of mild inflation would aid retail dynamism going forward.
CPI was pressured by seasonality in prices from vegetables and legumes and education services