Exports picked up, amid sluggish imports.
We have adjusted our fiscal deficit projection to 2.3% of GDP (from -1.5%).
Solid import growth and a double-digit export drop led to the largest August trade deficit on record.
Available surveys point to two rounds of voting as the most likely scenario.
Las elecciones presidenciales tendrán lugar el próximo 27 de octubre
El gobierno hace uso de la política fiscal y aumenta el gasto para mantener la demanda interna
We don´t expect more fiscal consolidation ahead.
Disinflation is likely to be slow and bumpy.
Surprisingly robust private consumption means growth this year could exceed our 3% call.
Recovery in economic activity was supported by an improvement of the natural resources sector.
Industrial production improved supported by a recovery in construction and mining output, but momentum remained soft
The acceleration of the easing cycle will depend on the favorable evolution of core inflation
We now expect inflation to end 2019 at 2.9%
El registro consolida nuestra visión de un recorte de 25 pb a la tasa de política monetaria (TPM) llevándola a 1,75% a finales de este mes
The inflation data consolidates our view of a 25-bp rate cut, to 1.75% later this month
The trade data is negative for activity, as it points to weak external and internal demand
Los datos de comercio son negativos para la actividad, ya que apuntarían a una débil demanda externa e interna
The unwinding of food price shocks, the still-negative output gap and controlled inflation expectations would support disinflation next year
Uncertainty surrounding the economy and delays in capital expenditure execution weigh on investment
Actividad sorprendentemente favorable de agosto significa que el crecimiento podría superar nuestro pronóstico del 2,2% para el año.
Surprisingly upbeat August activity means growth could come in a tick above our 2.2% forecast for the year.
Given the strong August print, growth could come in above our 2.2% forecast this year (4% last year).
Inflation crossed below the BCRP central inflation target of 2%.
Dado el robusto registro de agosto, el crecimiento podría superar nuestro pronóstico de 2,2% este año (4% el año pasado).
Below potential growth reinforces the expectation of another rate cut in October.
Wait-and-see mode as the board observes the development of high inflation, resilient activity and a moderating labor market.
We expect the unemployment rate to average 10.3% in 2019, from 9.7% for 2018.
Conforme el mercado laboral refleje las holguras de la economía, reforzará la visión de que las presiones inflacionarias de demanda son bajas.
Crecimiento bajo potencial refuerza la expectativa de otro recorte de tasas en octubre
As the labor market reflects economic slack, it would bolster views that demand-side inflationary pressures remain low
We expect another round of weak activity indicators in the coming months.
The probability of a lower policy rate than that we currently forecast is increasing.
The decline in imports suggests a new round of weak activity following the primary election.
Large uncertainty favors more gradual cuts ahead, with incoming data key behind the timing of the next movement.
We recently raised our primary fiscal deficit forecast for this year to 0.8% of GDP.
We expect stable rates for the remainder of the year, but the balance of risks titled towards rate cuts rather than hikes ahead.
Alta incertidumbre favorece recortes graduales, y la evolución de los datos económicos será clave para definir el momento del próximo movimiento.
Public and private investment deteriorated, while private consumption expanded at a soft pace
No relief for the economic downturn. We recently adjusted our GDP forecasts down to -2.5% (from -1.4%).
A challenging global scenario means Colombia’s external account imbalances are likely to persist
We expect a 1.5% GDP contraction this year (from +1% previously).
We have cut our growth projections for Uruguay to zero growth in 2019 (from 0.5%) and 1.5% in 2020 (from 2%).
Economic activity was supported by an improvement in the natural resources sector
Esperamos una contracción del PIB de 1,5% este año (desde +1% anteriormente).
Recortamos nuestra proyección a crecimiento nulo este año (desde 0,5% anteriormente) y a 1,5% en 2020 (2% previamente).
Further easing will be dependent on incoming information.
Strong activity momentum, along with rising inflation would lead the central bank to keep rates stable
Consumer prices spiked in August after a new depreciation of the peso.
Weakness in the U.S. economy seems to be starting to weigh on Mexico’s manufacturing sector
The government took a first step in debt-restructuring direction.
Moderating inflation means higher odds of further monetary easing, likely already in September.
Growth and oil production projections are on the optimistic side
We now expect inflation to end 2019 at 3.3%
Caída de exportaciones junto con débiles importaciones de bienes de consumo y de capital indican que persistiría un desfavorable dinamismo de la actividad
Declining manufacturing exports along with weakened consumer and capital goods imports hint at unfavorable activity dynamics.
Uncertainty surrounding the economy and delays in capital expenditure execution weigh on investment
Pese a las bajas presiones subyacentes, la inflación terminaría este año cerca de la meta
Inflation, coupled with positive developments on activity and a wide CAD means the policy rate will likely stay at 4,25% in the near term.
Despite low core inflationary pressures, headline inflation would end the year close to the target
El débil desempeño de la actividad al inicio de año, aumentan la probabilidad de que el crecimiento sea inferior a nuestro pronóstico (2,4%).
The sluggish start to the year, along with mixed recovery signs, increase the likelihood of growth below our 2.4% call for 2019
More rate cuts are likely, but the timing and magnitude of additional easing is uncertain
The September’s decision raises the likelihood that the easing cycle extends beyond 100-bps, taking rates below 2.0%.
Es probable un aumento del estímulo monetario, pero el momento y la magnitud de los recortes son inciertos
La decisión de septiembre aumenta la probabilidad de que el ciclo de recortes se extienda más allá de 100 pb, llevando las tasas por debajo del 2,0%.
The monthly GDP proxy would grow 3.2% in July, as the boost from manufacturing is partly offset by weaker-than-expected consumption data.
Esperamos que el Imacec crezca un 3,2% en julio, ya que el impulso de la manufactura se vería compensado en parte por un consumo más débil de lo esperado.
The elevated CAD, rising headline inflation and the weakening of the COP would prevent the central bank from cutting rates in the short-term
Low inflation increases the odds of the BCRP cutting the policy rate further in the short-term
As the growth outlook remains uncertain, we expect job growth to remain contained
Seasonal factors and a low base of comparison aided the activity recovery in the month.
Puesto que las perspectivas de crecimiento siguen siendo inciertas, esperamos que el crecimiento del empleo permanezca contenido.
Factores estacionales y una base de comparación baja ayudaron a la recuperación de la actividad en el mes.
Board members seem to be divided on the monetary forward guidance.
The easing cycle is set to continue.
Non-oil imports deteriorated, dragged by a sharp contraction in imports of capital goods.
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